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September Commentary Ben Carlson's chart

sma3
in Other Investing
This old retired guy looked at Carlson's chart for the number of years it took to consistently made 4% ( one recommended withdrawal rate ) or more on average over the preceding period.

In other words how long after a major loss would it take to get back to over 4% return on average to equal your withdrawals

Out of the 31 years listed in 9 years you would have to wait over 5 years to get back to over 4% average return

In 2000 you had to wait 14 years before your ave returned to over 4%

One wonders if the recommended "three to five years of expenses in cash" is sufficient.

The SP500 didn't permanently recover to it's 2000 peak until 2012



Comments

  • larryB
    @Sma3. All good points. This old retired guy thinks that the 50/ 50 allocation the 4% rule is based on to too aggressive for sleeping well. I am thinking more in terms of dollars at risk instead of %. A 15% decline sounds sorta benign compared to that number express in raw dollars of our nest egg.
  • Baseball_Fan
    Agree with you 100% @larryB. I wouldn't be able to sleep at night if I experienced five years of hard work earnings go poof in the market within a few weeks...

    Like I stated earlier, easy to say in hindsight just stay invested etc...but the market doesn't care what you need to support your retirement and most crapped themselves when the markets drew down by 30% plus... They say it always comes back like that's a law of gravity or something...just like housing always goes up ..hmmm

  • larryB
    Speaking as an old guy with hindsight,,,, it always comes back. Speaking as an old guy,,, it might not be comeback in my lifetime. I don’t think younger folks often understand the circumstances of the elders. I know I never gave em a thought. Now I notice old folks wherever I go. They seem to be everywhere.
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