mathjak107
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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- Jul 27, 2005
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- 6,210
I have seen some version of this post from you many times about the 15 year 2% real return minimum.
IIRC, Karsten Jeske in his Early Retirement Now Safe Withdrawal posts had stated that that after 15 years if the portfolio is inflation adjusted 0% return, then the portfolio should never fail over the full 30 year period.
Am I misquoting or perhaps there is another nuance?
i haven’t done the math but kitces has .
it actually takes 1% but you could be flat broke in year 31 . so 2% is a better goal
EXECUTIVE SUMMARY
As retirees and their planners adjust to the 'new normal' - a world of lower-than-average returns for the foreseeable future, many have questioned whether the historical safe withdrawal rate research is still valid. After all, if returns will be below average in the coming years, doesn't that imply safe withdrawal rates must be below average as well?
In point of fact, though, safe withdrawal rates do not depend on average returns in the first place; the worst safe withdrawal rates in history that we rely upon are actually associated with 15-year real returns of less than 1%/year from a balanced portfolio!
Accordingly, given current bond yields, dividend yields, and inflation, if the current environment for today's retirees will result in a "new record low" safe withdrawal rate, the S&P 500 would still have to be no higher in 2027 than it was in 2007 or even 2000!
On the other hand, merely projecting equities to recover to new highs by the end of the decade or generating a mid-single-digits return would actually represent an upside surprise, allowing for higher retirement spending than 4.5% safe withdrawal rates!
https://www.kitces.com/blog/what-returns-are-safe-withdrawal-rates-really-based-upon/
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