“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
The answer is sequence of return risk. Imagine if you start your retirement today and the market drops 20% today, if you took a large withdrawal, your portfolio would never recover. As such, you have to be more conservative when forecasting
Latest Answers