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here are even the worst case scenario's we have had to date . these are the time frames the 4% rule is based on .
in the end they are all within 2% or so 30 years later .
1907 stocks returned 7.77% over the next 30 years
1929 stocks 8.19%
1937 stocks 10.12
1966 stocks 10.23
for comparison the 140 year average's were stocks 8.39
last 30 years ending dec 2016 10.46%
last 5 years are up over over 15% , the last 3 years 12% and 1 year up 23% . so you know the averages will not likely continue at this pace , when all is said and done we should come in right within that normal range as the rolling time frame reduces and levels out . guess what too , if you retired 10 years ago , even with these gains over the last 5 years , you really accumulated nothing special , 10 year returns are right in the pack at 7.54% , even a bit low so if you are living off your portfolio and think you can order the porche because you get a false sense of where you are based on the last 5 years it really would not be a good idea .
so my point is i would not treat the last 5 years as a windfall and something that can just be spent like a drunken sailor . those gains are likely going to be needed to maintain the long term normal returns as returns reduce and once again head towards reverting back to the mean ..
i think for someone living off their portfolio kitce's method for taking raises is very smart . if you are not living off your portfolio and have other income do as you like , it is irrelevant what you spend in that case . you don't have to concerned about taking a pay cut if you over spend the portfolio .
The figures you quote are what--
Total stock market return?
So depending on how much and in what choices (REIT, Emerging Markets, Gold--however you are diversified)--what % of bonds to equities and what duration--your returns might be more or less==
Correct?
where their idea of doing something is watching a high school game , walking in the woods or fishing .
You just described the things I plan to do in retirement. Well that and golf, now that's an expensive hobby.
I have never been a big fan of a large cash reserve. But as I draw closer to retirement age, and as the bull market continues, I am thinking 2 years worth of living expenses in cash is probably going to be a good idea. I have to figure there's a good chance a bear market will hit and may be continuing into my first few years of retirement. I like the idea of drawing from the cash reserve to buy time for the market to recover.
Last edited by DaveinMtAiry; 11-14-2017 at 12:13 PM..
Some folks will get by on far, far less than their working gross income. FICA withholding is gone. Mortgage is paid off at retirement. No longer putting 10%-20% or more into retirement account. Kids are no longer a financial drag (theoretically, anyway). They are going to volunteer, walk the dog, garden, and just relax in retirement. I can see these people living nicely on half of their working gross income.
Then of course we have the flip side of that. Someone who still has a mortgage in retirement, never had kids, and plans to do things in retirement that cost lots of money. Twice their gross may not be enough in that case.
This ^^
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). They are going to volunteer, walk the dog, garden, and just relax in retirement. I can see these people living nicely on half of their working gross income.
