What's your retirement nut?

[zimmer879]

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ANy of you guys students of the markets? Do you realize that between 1966 and 1982 (that is almost a lifetime for many on these boards) the dow was FLAT in nominal terms and DOWN 40% in real terms? That is was down 90% (yes, that is not a typo) from 1929-1933? That the NDX was down 80% 00-mid 03? That long bonds were down 20-25% in 1994? Anyone here actually had to manage a portfolio and LIVE on it? Models don't pay bills. And drawdowns are MAJOR problems when you are living off the cash flow. Retiring and NEEDING 8% per year to hit your spending is insane. And people are way underreserving for inflation -- its at least 3% of whatever return you are getting. Education and healthcare, 2 major expenses, have gone up much faster than that for years.

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First of all he was referring to 8% returns during his earnings years so settle down.

Secondly there are studies that incorporate safe withdrawal rates for both the 1929- and 1966- 1982 periods. I linked to the page earlier but this site has a lot of good info and here's an article referring to 1929: http://www.retireearlyhomepage.com/restud1.html

Also note that this article and all articles on this site are using inflation adjusted withdrawal rates.

What this comes down to is how safe is safe when it comes to determining withdrawal rates for retirement. If you want a 100% guaranteed risk free retirement nut, wait until you have $20 mill in the bank and invest in munis like Scorpion says. If you are willing to add just a modicum of risk to your portfolio then you can benefit from the far superior returns of the stock market and still be 99% sure that your nut will remain intact. Also rememebr that the biggest risk to your retirement savings comes the first few years after you retire, so you'll know relatively quickly whether you're in trouble or not. Some people will be comfortable with the idea of getting to retire years earlier knowing that if within the first few years the stock market drops 90%, they might have to go back to work. Or if they're maintaining the same lifestyle they had when working, they can choose to reduce their expenses instead. Point being, there are a lot of options for people when it comes to retirement if they choose to consider them.