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Reply to "What growth rate to use in retirement planning?"
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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I have always used 2% and then assumed zero inflation. That way I could see how much I would have as it related to today’s prices. [/quote] That is really low. A two percent real rate of return is awful and that has never happened over a 30 year time period with an 80/20 portfolio in the US. The historical percentile range from (inflation adjusted returns over 30 year time periods from 1870-2024) for an 80/20 portfolio is Worst: 2.2% 5th: 3.5% 10th: 3.9% Median: 5.7% The lowest number that is reasonable to use for your return assumption is a 3.5% real rate of return (unless you have a significant percentage of your portfolio in bonds). [/quote] What about a 10 or 15 year time period? [/quote] The range in inflation adjusted returns with a 15 year time period assuming a 60/40 portfolio. Worst: -1.5% 5th: 0.3% 10th: 1.5% Median: 5.5%[/quote]
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