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Old 11-23-2016, 02:14 AM
Location: Houston
22,639 posts, read 11,663,875 times
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I budget 4% but expect 5%-7%.

I could actually go back to self employment in a year (my 59.5 birthday) if not for health insurance.
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Old 11-23-2016, 03:20 AM
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i never considered future rates of return since decades were involved .

now being retired i am more concerned with the shorter term so yes valuations play a role in my draw rate
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Old 11-23-2016, 11:03 AM
Location: Gilbert, AZ
3,220 posts, read 1,982,304 times
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Originally Posted by nep321 View Post
Yeah i'm not going to concern myself with rate of return and inflation, etc. It's extremely hard to predict what will happen over the next 30-40 years (I'm 32 now). The strategy that I am taking assumes no growth/decay and no inflation/deflation. However, AFTER the fact of growth over the years, I may then decrease my contributions as I get older, in order to reach my target savings goal. I just hope I'm doing this right.
There's certainly nothing wrong with making conservative assumptions. You're assuming zero real return, which if you are investing in stocks is very conservative. Have you read Stocks for the Long Run by Siegel? He looks at the long-run returns from U.S. stocks and stocks from other countries. Looking at 30-year periods it's pretty rare for stocks to have done worse that 4% real annualized, at least in the U.S.

I wouldn't necessarily cut your savings rate regardless. Having more assets opens up more opportunities in the future. Maybe you will want to start your own business at some point, or work part time, etc? Or health issues could prevent you from working full time as long as you like.
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Old 11-23-2016, 03:01 PM
Location: Mount Airy, Maryland
10,504 posts, read 5,972,160 times
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Did I figure in rate of return as I set up my contribution levels? No, I simply contributed as much as I could. As I get closer and the planning kicks in of course I look at estimated future returns to try to get a handle on how much money we have. Who wouldn't?
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Old 11-23-2016, 05:37 PM
Location: Idaho
4,679 posts, read 4,511,339 times
Reputation: 9207
No, never consider rates. I'm like the container ship that at the beginning a cross-ocean voyage, upon leaving the harbor would set the auto-pilot and everybody goes down below for a couple of weeks to play cards and watch old movies. Slow and steady, without any deviation in course.


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Old 11-24-2016, 06:05 AM
Location: Alaska
5,356 posts, read 16,381,389 times
Reputation: 4024
My approach was to make a spreadsheet that had a range of returns during the accumulation and spending stages. They ranged from 1-8% and my goal was to have a positive investment balance at age 95. As long as 1% return kept investments above $0, I was good to go for retirement. Any higher return average just meant leaving a bigger inheritance.
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Old 11-24-2016, 11:22 AM
2,756 posts, read 1,568,619 times
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Did not consider rates for several reasons. 1. they tend to correlate with inflation, so become meaningless over long periods. 2. who knows how much I'll need in retirement since the number is so heavily influenced by inflation. 3. too many unknowns.
Retired now. What I did was always capture the match, and stepped up during my 50s to the max. have a decent nest egg now, but who knows what inflation will do.
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