A apparent poor case, low all-stock 30 year SWR from 1969 for instance doesn't reflect the accumulation years run up to that. If the prior 30 (whatever) accumulation years yielded above average rewards then the individual had relatively more such that a lower decumulation WR% was really less worse.... snip
One measure I've used is to assume home + imputed to align with and be similar to stock + dividends. Yes more artful than scientific but at least a tool/measure. i.e. assume a individual buys a large home in their younger years using a mortgage that they pay off during their working life, paying interest but not having to find/pay rent etc. In effect they lump into a nominal amount (house value), save (pay interest/pay down loan) and benefit from any real gains in that initial lump sum amount, for 30 years when it becomes full owned (mortgage paid off). They might then sell or downsize to load a retirement portfolio asset allocation. A indicator of how well (or not) they had accumulated a lump sum during their accumulation years. How well or not they had accumulated a amount (outright owned home value) and how much in real terms that represented can then be compared to the subsequent regular 30 year max WR% from that accumulation end/decumulation start date. A alternative would be to calculate 30 years of accumulation into stock saving a regular/consistent real amount year after year and how well (or not) that had accumulated in real terms. On such measures for instance 1969 start of retirement wasn't as bad as the relatively low 30 year SWR generally indicated as the accumulation years leading up to that start of retirement date had performed relatively well. A lower max WR% was in effect relevant to a higher amount having been accumulated.
I haven't looked at US figures but believe that 1929 was another bad start of decumulation start year i.e. ran slap bang into the Wall Street Crash when stocks halved, halved again relatively soon. However prior to that were the Roaring 20's when stocks had doubled and doubled again. Applying/using a constant measure such as 25x yearly spending, 4% SWR isn't a good choice, as 1929 all stocks 3.8% SWR highlights. If you got to 25x due to rapid stock double and double again over a relatively short period (10 year) its risky to assume that 25x is enough/a 4% SWR is OK, the expected amount required should be increased/SWR % reduced, perhaps 3% SWR or 33x being required. In other cases after low real accumulation rewards or deep dips, a lower than 25x/higher SWR might also be assumed as potentially being OK, perhaps even 8% SWR.
Statistics: Posted by seajay — Sun Jul 07, 2024 4:13 am — Replies 145 — Views 17365