Last edited Wed Jul 31, 2019, 04:27 PM - Edit history (3)
Or if you don't need to withdraw more than say 2%/year, that will work out fine too.
At higher levels of drawing down, people in equities/bonds mixes have their accounts last longer than those in treasury bills. According to simulations based on historic data.
On risk - yes, the S&P 500 index dropped 49.1% from peak-to-trough during the dot-com crash, and 56.8% from peak-to-trough during the housing bubble crash. And 48.2% in the 1973-74 crash.
I was mostly in bonds during the dot-com crash (out of fear of Y2K, LOL), so I "missed" that one. But I was maybe 80% in equities during the housing bubble crash, and I wasn't overjoyed watching the nest egg go down by about half. (It eventually recovered and went on to new highs, as I expected it would, but it was scary).
EDITED TO ADD: And 48.2% in the 1973-74 crash.
EDITED TO ADD: One's savings must also cover healthcare expenses in old age -- Fidelity every 2 years does a bi-annual report on how much out-of-pocket spending a 65 year old couple, both covered by Medicare, on average will spend out-of-pocket on healthcare over their lifetime -- the latest is $280,000.
https://www.cnbc.com/2018/04/27/how-to-plan-for-higher-health-care-costs-in-retirement.html
And that doesn't include long-term care (assisted living facilities, nursing homes, etc.). Nor does it include most dental, vision, or hearing. Nor over-the-counter medications.
So one must be cognizant that if one can live on Social Security and their pension early in retirement, that might not be the case when the health starts to go seriously downhill.
EDITED: added the link to the Fidelity article, and it's $280,000, not $250,000. And it comes out every 2 years, not every year
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