4 ms·
I’m not sure they’re considering inflation as well. A safe withdrawal rate would be like annual rate of return - annual inflation - 1% safety buffer. So 4% -
by almost_usual 3y ago
I’m not sure they’re considering inflation as well.
A safe withdrawal rate would be like annual rate of return - annual inflation - 1% safety buffer.
So 4% - 2% (target inflation rate) - 1% (buffer) = 1%.
If you don’t include the 1% buffer here you have no margin of safety for a market downturn.
- AbeBW 3y agoThe 4% figure comes from something called "The Trinity Study" and most definitely considers inflation. For more information about safe withdrawal rates then you probably want see https://earlyretirementnow.com/safe-withdrawal-rate-series/ https://earlyretirementnow.com/safe-withdrawal-rate-series/