Is it possible to live entirely off the stock market?

[mathjak107]

not technically , that is exactly how the safe withdrawal rate is calculated .

[ShampooBanana]

Originally Posted by mathjak107

using 28% equity's has only had an 86% success rate out to 30 years as far as maintaining 4% inflation adjusted . anything under 90% is considered unacceptable .

live 35 years in retirement and your chances of not running out of money falls to just 67% .

it failed to have anything left 1/3 of every rolling 35 year period in history .


folks , this is why you need to watch what charts and data is posted on internet forums . many times what is posted has little to do with what the poster is trying to prove because the poster is ill-informed on the subject .

below are the actual results once the sequence is included .

Mathjak, while you chart is very informative and your information useful, it is based on the assumption that the "retiree" is using ONLY withdrawal from investment accounts as his/her exclusive income source. It does not account for the potential of secondary income streams such as pensions that might kick in, social security, or part-time or temporary wage or hobby income. A person could also conceivably sell assets (downsize home, etc.) in order to not draw down all of their remaining investment pool. This could significantly prolong the timeline and reduce the failure rate of any investment strategy.

[mathjak107]

no , it is the amount of your withdrawal from your investments after you subtract other income out .

so if i need 100k and have 60k in ss and pension i need 40k from investments .

if i have 1 million dollars i need to find an allocation that meets 90% success rate for 4% .

if i need only 20k from savings and have 80k in ss and pension and have 1 million all i need is a 2% draw rate and fixed income will have an above 90% success rate .

the chart is only what you need from your portfolio

[mathjak107]

Originally Posted by ShampooBanana

Mathjak, while you chart is very informative and your information useful, it is based on the assumption that the "retiree" is using ONLY withdrawal from investment accounts as his/her exclusive income source. It does not account for the potential of secondary income streams such as pensions that might kick in, social security, or part-time or temporary wage or hobby income. A person could also conceivably sell assets (downsize home, etc.) in order to not draw down all of their remaining investment pool. This could significantly prolong the timeline and reduce the failure rate of any investment strategy.

don't forget , retirement is no different then your working years as far as how you allocate your income .

all safe withdrawal methods are based on the fact that your portfolio can be out of money based on the time frame you select .

depending on markets , rates , inflation and sequences of returns you can end up with zero to more then 2x what you started with and everything in between .

so you may want to set a side an emergency fund not part of the capital you are counting on for income . or you may want money set a side for long term care , a new car or any other major expense that exceeds budget .

so that money should be kept out of the balance when figuring out how much income you can safely generate .

but again all calculations for what you need in income are based solely on that part that has to come from your portfolio AFTER YOU SUBTRACT OUT OTHER SOURCES . it is all based on the amount of your portfolio and the money you hope to draw from it .

certain allocations at certain draw rates have already failed over and over in the past and are risky . usually going less then 35% equity's has failed way to many times in the past at 4% and ran out of money before the designated amount of years .


trying to draw more then 2% inflation adjusted with no equity's has resulted in high rates of failure ,especially trying to draw 4% . so you will need either more money to invest more conservatively or a lower draw to be that conservative .

a 40-50% mix has performed the best ..