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A friend of mine who is in his 80s says he put about $1 Million in the ETF SPY 25 years ago and pulls 5% out each year and increases his withdrawal an average of 4% a year for inflation. He claims to have more money in the account this year, 25 years later than he did in 1990 when he retired. I told him he was lying but he insists that it is true.
SPY is his only investment and he takes out 1.25% of his investment once a quarter.
They say you should have bond funds in your retirement account, but he says that just slows things down.
Can anyone find a way to verify if that is in fact possible. I doubt it but we have had some really good years but some terrible years in the S&P500
I did a spreadsheet based on the annual SP 500 and dividends results and he came out with $640K after 25 years assuming One Million Dollar initial investment and a five percent annual distribution and a four percent annual inflation increase. If it was not for 2008, he would still have over a million in 2015. So at least in the last twenty five years you don't need a bond fund diversification.
A friend of mine who is in his 80s says he put about $1 Million in the ETF SPY 25 years ago and pulls 5% out each year and increases his withdrawal an average of 4% a year for inflation. He claims to have more money in the account this year, 25 years later than he did in 1990 when he retired. I told him he was lying but he insists that it is true.
The S&P 500 is currently more than 500% above where it was in September 1990.
So yes, it is entirely possible to have more money in the account now.
drawing 4% inflation adjusted from a 60/40 mix has left you with more than you started with 90% of the time and 2x or more what you started with 67% of the time frames since 1926 .
drawing to little can be a problem too as for some they could have enjoyed way more money over their time alive .
bonds have actually helped things as a 50/50 mix had a better success rate then 100% equity's out to 30 years . , but then again we had 40 years of falling interest rates .. 100% equity's did better in retirement from 35 years out .
a 50/50 mix never had a 15 period where it lost money . if it had more than just the s&p 500 and included small and midcaps i think it never had any losing 10 year periods either .
the s&p 500 did have some losing 10 and 15 year periods
Last edited by mathjak107; 10-04-2015 at 04:07 AM..
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