“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 [Trinity Study](https://en.wikipedia.org/wiki/Trinity_study) is what a 4% Safe Withdrawal Rate is based on. What you need to consider is that the withdrawals may exceed the income earned by the portfolio, and the total value of the portfolio may well shrink during periods when the stock market performs poorly.
You have a higher risk when “the market” goes *down* early on in your withdrawal period, compounded with a high withdraw rate; as you cannot bounce back from $0.
The Trinity Study determined that the 4% withdrawal rate would succeed almost 100% of the time over a 30 year period.
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