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The article was first posted on June 1, 2002.
Notes:
(1) The Maximum Withdrawal Rate is the withdrawal rate that leaves just $1 in the account at the end of the 30-Year pay out period. The MIllenium Edition of the Retire Early Safe Withdrawal Study was used for this calculation. The Excel "Goal Seek" function was used to determine the withdrawal rate that left $1 in the account for each of the 30-year pay out periods examined.
(2) The S&P500 Price/Earnings Ratio data was obtained from the Shiller database, see link: http://www.econ.yale.edu/~shiller/data/ie_data.htm
(3) The 75% S&P500/25% Cash portfolio assumes 75% of assets in an S&P500 index fund and 25% invested in 3-month commercial paper. Commercial paper roughly matches the returns from a money market fund or short-term Certificates of Deposit (CDs). An annual expense ratio of 0.18% of assets was used along with annual rebalancing and indexing the annual withdrawal to the CPI.
(4) The 100% Cash portfolio is 100% 3-month commercial paper. An annual expense ratio of 0.18% of assets was used along with annual rebalancing and indexing the annual withdrawal to the CPI.
(5) The 100% I-Bond portfolio is 100% I-Bonds with a 2.00% coupon. Because these securities may be bought without commission, an annual expense ratio of 0.00% of assets was used along with annual rebalancing and indexing the annual withdrawal to the CPI.
| 30-Year |
S&P500 |
----------Maximum Withdrawal Rate---------- |
| Period |
P/E Ratio |
75% S&P500/ |
100% |
100% |
| Starting
in |
(Prior Year) |
25% Cash |
Cash |
I-Bonds |
|
|
| 1871 |
N/A |
9.714% |
9.072% |
4.563% |
| 1872 |
11.1 |
9.485% |
9.284% |
4.599% |
| 1873 |
12.1 |
8.877% |
8.836% |
4.303% |
| 1874 |
11.8 |
8.935% |
8.278% |
4.188% |
| 1875 |
10.1 |
8.754% |
7.953% |
4.235% |
| ------------------------------------------------------------------------------------------------------------- |
| 1876 |
10.1 |
9.098% |
8.121% |
4.530% |
| 1877 |
12.6 |
9.403% |
6.961% |
3.790% |
| 1878 |
12.6 |
9.296% |
6.281% |
4.016% |
| 1879 |
10.8 |
10.722% |
7.617% |
5.393% |
| 1880 |
11.3 |
7.910% |
7.238% |
4.227% |
| ------------------------------------------------------------------------------------------------------------- |
| 1881 |
13.1 |
7.483% |
7.886% |
4.841% |
| 1882 |
12.7 |
7.676% |
7.815% |
4.402% |
| 1883 |
13.5 |
7.259% |
7.268% |
4.143% |
| 1884 |
13.6 |
7.096% |
6.503% |
4.017% |
| 1885 |
13.2 |
7.976% |
6.302% |
4.314% |
| ------------------------------------------------------------------------------------------------------------- |
| 1886 |
13.8 |
6.951% |
6.306% |
4.465% |
| 1887 |
18.9 |
6.940% |
6.471% |
4.677% |
| 1888 |
16.8 |
6.901% |
6.100% |
4.265% |
| 1889 |
15.1 |
6.657% |
5.711% |
4.250% |
| 1890 |
19.9 |
6.670% |
5.668% |
4.568% |
| ------------------------------------------------------------------------------------------------------------- |
| 1891 |
18.0 |
6.713% |
5.135% |
4.185% |
| 1892 |
16.5 |
6.548% |
5.446% |
4.796% |
| 1893 |
16.1 |
5.553% |
4.460% |
3.863% |
| 1894 |
15.5 |
6.385% |
4.206% |
4.253% |
| 1895 |
17.2 |
6.594% |
4.201% |
4.496% |
| ------------------------------------------------------------------------------------------------------------- |
| 1896 |
25.4 |
6.412% |
3.911% |
4.304% |
| 1897 |
17.3 |
6.722% |
3.944% |
4.556% |
| 1898 |
19.3 |
6.186% |
3.919% |
4.489% |
| 1899 |
15.6 |
6.200% |
4.503% |
5.172% |
| 1900 |
16.9 |
6.062% |
4.291% |
4.327% |
| ------------------------------------------------------------------------------------------------------------- |
| 1901 |
12.7 |
5.568% |
4.306% |
4.539% |
| 1902 |
14.7 |
5.474% |
4.617% |
4.857% |
| 1903 |
15.9 |
5.046% |
4.304% |
4.241% |
| 1904 |
13.6 |
6.096% |
4.326% |
4.533% |
| 1905 |
12.7 |
5.119% |
4.255% |
4.432% |
| ------------------------------------------------------------------------------------------------------------- |
| 1906 |
16.7 |
4.728% |
4.311% |
4.629% |
| 1907 |
14.6 |
4.689% |
4.060% |
4.337% |
| 1908 |
12.7 |
6.006% |
4.060% |
4.575% |
| 1909 |
10.5 |
5.359% |
4.421% |
4.902% |
| 1910 |
15.2 |
4.586% |
4.008% |
4.139% |
| ------------------------------------------------------------------------------------------------------------- |
| 1911 |
13.3 |
4.764% |
3.886% |
4.384% |
| 1912 |
12.9 |
5.086% |
4.054% |
4.750% |
| 1913 |
15.2 |
5.033% |
3.968% |
4.522% |
| 1914 |
13.4 |
5.433% |
3.876% |
4.476% |
| 1915 |
13.5 |
6.022% |
3.893% |
4.563% |
| ------------------------------------------------------------------------------------------------------------- |
| 1916 |
13.6 |
5.691% |
4.268% |
4.986% |
| 1917 |
10.0 |
6.544% |
4.940% |
5.313% |
| 1918 |
6.3 |
9.221% |
5.552% |
5.249% |
| 1919 |
5.7 |
10.226% |
6.253% |
5.224% |
| 1920 |
8.0 |
9.429% |
5.869% |
4.409% |
| ------------------------------------------------------------------------------------------------------------- |
| 1921 |
9.6 |
10.013% |
4.937% |
3.982% |
| 1922 |
9.4 |
9.990% |
4.726% |
4.439% |
| 1923 |
22.6 |
9.059% |
4.661% |
4.597% |
| 1924 |
12.5 |
9.301% |
4.490% |
4.466% |
| 1925 |
9.0 |
8.599% |
4.493% |
4.620% |
| ------------------------------------------------------------------------------------------------------------- |
| 1926 |
11.1 |
7.492% |
4.235% |
4.367% |
| 1927 |
10.1 |
7.172% |
4.027% |
4.413% |
| 1928 |
10.9 |
5.810% |
3.805% |
4.411% |
| 1929 |
15.5 |
4.434% |
3.584% |
4.460% |
| 1930 |
17.8 |
4.520% |
3.194% |
4.146% |
| ------------------------------------------------------------------------------------------------------------- |
| 1931 |
13.9 |
5.032% |
2.793% |
4.003% |
| 1932 |
17.0 |
7.009% |
2.419% |
4.005% |
| 1933 |
14.0 |
8.169% |
2.417% |
4.531% |
| 1934 |
17.2 |
6.339% |
2.445% |
4.562% |
| 1935 |
23.7 |
7.213% |
2.447% |
4.493% |
| ------------------------------------------------------------------------------------------------------------- |
| 1936 |
16.2 |
5.490% |
2.468% |
4.523% |
| 1937 |
17.9 |
4.609% |
2.454% |
4.457% |
| 1938 |
16.8 |
6.247% |
2.389% |
4.362% |
| 1939 |
10.5 |
5.835% |
2.352% |
4.389% |
| 1940 |
18.8 |
6.037% |
2.367% |
4.480% |
| ------------------------------------------------------------------------------------------------------------- |
| 1941 |
13.2 |
7.527% |
2.615% |
4.916% |
| 1942 |
10.0 |
9.326% |
2.800% |
4.759% |
| 1943 |
8.0 |
9.053% |
2.873% |
4.555% |
| 1944 |
9.7 |
8.451% |
2.931% |
4.526% |
| 1945 |
12.7 |
8.029% |
2.986% |
4.522% |
| ------------------------------------------------------------------------------------------------------------- |
| 1946 |
14.4 |
7.770% |
3.515% |
5.224% |
| 1947 |
19.2 |
9.935% |
3.872% |
4.886% |
| 1948 |
13.5 |
10.592% |
3.917% |
4.494% |
| 1949 |
9.0 |
10.377% |
3.826% |
4.344% |
| 1950 |
6.6 |
10.574% |
4.127% |
4.790% |
| ------------------------------------------------------------------------------------------------------------- |
| 1951 |
7.2 |
9.470% |
4.280% |
4.627% |
| 1952 |
7.5 |
8.755% |
4.270% |
4.452% |
| 1953 |
10.0 |
8.483% |
4.288% |
4.483% |
| 1954 |
10.9 |
8.742% |
4.265% |
4.397% |
| 1955 |
10.1 |
6.880% |
4.291% |
4.443% |
| ------------------------------------------------------------------------------------------------------------- |
| 1956 |
12.6 |
6.060% |
4.369% |
4.555% |
| 1957 |
12.1 |
6.186% |
4.453% |
4.582% |
| 1958 |
13.3 |
6.819% |
4.507% |
4.483% |
| 1959 |
12.5 |
5.516% |
4.494% |
4.464% |
| 1960 |
18.8 |
5.462% |
4.486% |
4.491% |
| ------------------------------------------------------------------------------------------------------------- |
| 1961 |
17.1 |
5.418% |
4.493% |
4.443% |
| 1962 |
18.6 |
4.952% |
4.507% |
4.468% |
| 1963 |
21.3 |
5.276% |
4.529% |
4.479% |
| 1964 |
17.7 |
4.728% |
4.494% |
4.446% |
| 1965 |
18.8 |
4.396% |
4.484% |
4.484% |
| ------------------------------------------------------------------------------------------------------------- |
| 1966 |
18.7 |
4.265% |
4.498% |
4.549% |
| 1967 |
17.8 |
4.734% |
4.516% |
4.556% |
| 1968 |
15.3 |
4.516% |
4.542% |
4.587% |
| 1969 |
17.7 |
4.525% |
4.564% |
4.664% |
| 1970 |
17.6 |
5.165% |
4.497% |
4.626% |
For more details on retirement withdrawals, check out the 68 page report How much can you safely withdraw from your retirement portfolio? (2nd Edition) available in our Retirement Reports Center
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