With the recent rough stock market I was wondering the other day how our mythical 4%-withdrawing retiree that started in Jan 2000 would be faring. I cranked up FIREcalc with the default assumptions and got the results through 2005 (the last year FIREcalc will display detailed results). I then put in the performance of the S&P, a 4.5% bond yield, and CPI changes for 2006, 2007 and 2008 so-far.
The results? This retiree would have a $384k inflation-adjusted portfolio today (down from the $750k starting value). With a withdrawal of $30k that puts him or her at 7.8% today.
Ranking historically the 2000 – Aug 2008 period is the 9th-worst in the FIREcalc database (compared improperly to full 9-year periods).
But here’s the good news: most of the other poor initial 9-year periods did recover historically, and end up supporting a 4% initial withdrawal. In the table below I’ve shown the initial withdrawal rate that left the retiree with ~$0 after 30 years.
The results? This retiree would have a $384k inflation-adjusted portfolio today (down from the $750k starting value). With a withdrawal of $30k that puts him or her at 7.8% today.
Ranking historically the 2000 – Aug 2008 period is the 9th-worst in the FIREcalc database (compared improperly to full 9-year periods).
But here’s the good news: most of the other poor initial 9-year periods did recover historically, and end up supporting a 4% initial withdrawal. In the table below I’ve shown the initial withdrawal rate that left the retiree with ~$0 after 30 years.
HTML:
Ifl-adj Max
Year 9 30-yr
Year Balance WR
1 1973 265,395 4.0%
2 1912 278,193 4.4%
3 1969 330,756 3.7%
4 1911 332,466 4.4%
5 1966 334,362 3.6%
6 1913 339,101 4.5%
7 1972 362,632 4.2%
8 1910 378,193 4.5%
9 2000 383,996 ?
10 1971 390,876 4.4%