“the market” returns “8% on average over time” why is the withdrawl rate to make my retirement last 30 years only 4% ? Seems like it should last forever at 4%
In: Mathematics
I thought it was because you’re starting by withdrawing 4% of the initial amount, and increasing that base amount by 3% for inflation each year. The combination of the above will give the money a 95ish percent chance of lasting 30 years. With the understanding that the 8% average over time returns includes some large, long periods of losses, and that sequence of returns risk could definitely kill your spending plan.
Latest Answers