4 ms·

This analysis doesn't seem to account for inflation? In 40 years, withdrawing $140,000 will not be nearly as much. For reference, inflation over the last 40 ye

• andrenader 2y ago
  It does factor in inflation. I am using a 3% safe withdraw rate in my calculations which is where I withdraw 3% of my portfolio balance in year one, then in year two I take that original amount and adjust it up by inflation, and continue doing this each year. So it will maintain the same buying power.
• aketchum 2y ago
  the 3% rule accounts for inflation. Average nominal return 7-10%, inflation of 3.5% average, leaves you 3% withdrawal with no decrease (or even an increase) in principle in real dollars
  • tunesmith 2y ago
    That's not what the 4% rule means. The 4% rule (modified to 3% by OP) is what you can withdraw without running out of principle. Maintaining the level of principle is a different thing entirely. Average nominal should be ignored anyway. It's never been a practical number for the individual investor to rely on. Mistakes, allocation models, people having less to invest when times are bad (and market is low), etc.