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Reply to "What growth rate to use in retirement planning?"
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[quote=Anonymous][quote=Anonymous]My financial advisor used 6%, which I think is aggressive, and the picture looks very rosy. I am currently in 60% equity, but have a 10% in cash which I will be investing over the next few years gradually (proceeds from exercising options last year and this year), so that percentage will go up slightly. Just retired this year. Should I ask him to rerun the numbers at 5%? [/quote] Historical real returns over a 30 year time period with 60/40 portfolio are 5th: 3.1% 10th: 3.4% Median: 5% I think assuming a 4% real rate of return would be reasonable and conservative. This gives you some wiggle room if they market does worse than average, but even if you end up with a 10th or 5th percentile outcome, you won’t be eating cat food in retirement. [/quote]
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