SWRs

Having brought up the subject of Safe Withdrawal Rates here, I reckon I should amplify my thoughts. Historically, a portfolio of U.S. stocks would have lasted at least 30 to 40 years had you withdrawn 4% of your initial portfolio, increasing each year with inflation. That's a worst case scenario. Click. For example, an S&P500 portfolio would last 40 years if the withdrawal rate were anywhere from 4% to over 12%. But that'd depend upon when you started withdrawing! Note the "worst case" SWR. It's about 4%. So is the infamous 4% rule useful? Indeed! When you're young and figure you'd need to withdraw $A each year, at retirement, how large should your portfolio be? You should try to achieve a portfolio of $25A. That way, A is 4% of your retirement portfolio, eh? Aah, but at retirement, you should ignore the 4% and make sensible withdrawals. Anyway, that's my position and I'm stickin' with it! ------------------------------------- P.S. To see the possible variations in future S&P portfolio values, we can select random monthly returns from the 1950s, 1960s, etc. and generate a 120 month portfolio: Scary, eh?