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Boy, I don't understand this scenario at all. At 150-200k/year, a lot of people are just going to try and save like crazy. CAPE is high, financial planners are
by tunesmith 6y ago
Boy, I don't understand this scenario at all. At 150-200k/year, a lot of people are just going to try and save like crazy. CAPE is high, financial planners are saying that "safe withdrawal rates" are no longer 4% or even 3.25%, but below even 2.5% - even if you're not in the very HCOL areas, you're looking at needing to save more than three million dollars to retire, which can take a very long time when expecting muted market returns in the future.
- Swizec 6y ago> a lot of people are just going to try and save like crazy Exactly. You save the money you don’t know how to meaningfully use right now.
- gshubert17 6y agoI can see using a lower withdrawal rate (approximating the yield on 10-year treasury bonds) if one is investing mostly in bonds. But two caveats: (1) Adding stocks to one's portfolio makes it easier to succeed with a 4% withdrawal rate in very low interest-rate environments: https://thepoorswiss.com/updated-trinity-study/ https://thepoorswiss.com/updated-trinity-study/ (2) Life expectancy. People who retire at a young age, should use a lower withdrawal rate. But a person age 75, expecting to die before age 100, could have a withdrawal rate of roughly 4% (reciprocal of 100-75) in a zero-interest-rate environment.