For example, our theoretical retiree in 1921 enjoyed an astounding 10.42% safe withdrawal rate largely because of historically low market valuations when he retired. Our 1966 retiree faced a difficult future with high valuations and rising inflation causing a 3.53% safe withdrawal rate. This is a difference of 3 times the spending capacity from the same nest egg simply because of the date you retired!
And if that isn’t shocking enough, the 2010 retiree is looking at a 1.8% safe withdrawal rate according to Pfau’s research. No, that is not a misprint – 1.8% – far below the conventional wisdom of 4% based on historical research. It is caused by persistently overvalued markets and razor thin interest rates that simply don’t exist in the historical data.