by KillingTime56
Many people are afraid to stop working even though the experts would say they are financially independent.
Though stock market returns in the future maybe different than in the past a study of stock market behavior in the last 50 years show past results is a good indicator of the future because over time the same broad trends happen over and over and over. Every decade people say: “this time is different!” and they are proven wrong.
So, some interesting statistics about past stock market activities that prove the 4% rule has been safe and a bit conservative because it is for the worst case.
1) a balanced mutual fund of 60% total Stock Market and 40% total bond market has been up 54% of trading days.
2) 33 out of the last 46 years a balanced portfolio has given a 4% or better return. With a 4% withdrawal each year, you will have a larger amount in your investment account on January 1st than the start of the prior year.
3) A balanced portfolio is up 71% of the years and down 29%.
4) 70% of the time, a 4% inflation adjusted withdrawal will leave your family or charity twice the amount of money you started with at your death.
5) A 4% inflation adjusted withdrawal survived every 28 year cycle starting in January 1926 to starting thirty years ago today. See link for more information:
www.fidelity.com/viewpoints/retirement/how-long-will-savings-last
What do you think?