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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Apologize if this is off topic but I was wondering what you think is a reasonable assumption to make about investment returns if you are within 10 years of retirement (assume 60% stocks) and after retirement. Also what is a reasonable assumption for average rate of inflation over the next 40 years

[/quote]

This a stupid question dear [/quote]

It's not.
Nobody knows but reasonable [b]conservative[/b] estimate would be 6% before retirement, 4% afterwards.[/quote]

I don’t know how conservative 6% is for a 60/40 portfolio. What are your estimates for stock and bonds returns?[/quote]

In my financial model, I assume a 5% rate of return (blended) and 3% inflation (i.e. Real Rate of Return is about 2%).  Even before retirement.  Of course, I'm pleasantly surprised each year when my return is in the 2 digits thanks to whatever is going on out there. :-).  Plan is to withdraw no more than 3% in retirement and the hope is to get more than 3% in real return on a go-forward basis.

[b]I also assume a "reset" (an event where my accounts is reduced by a certain % and stays at that level) of my account balances by a large percentage at some point.  I adjust each year's model to reflect that.  If I get by a given year without a reset happening, I modify the model to incorporate the reset into the following year.[/b]  How much?  My model currently assumes a 40% reset in 2021.  If we get through 2021 without a major fiasco, I'll up that to 45%.  This is more of a stress test of my portfolio with ultra-conservative assumptions.

We are 55 and 50 y.o. with plans to retire in no more than 10 years from now. 
[/quote]

PP, I'm curious about this. When you say "reset" is this to reflect a correction or crash? And if so, then I assume you take the new amount and assume a 5% ROI and 3% inflation moving forward with the new amount?? Thanks[/quote]

Yes.  Using numbers.. Let's say Jan 2021 I start off with $1million in total assets, 5% growth takes it to $1,050,000.  I adjust this down by 40% (it becomes $630,000).  This flows into the opening balance for 2022 and all subsequent growth and spending is based on this balance.  When Jan 2022 comes around and we have not had a "real" crash, I use the actual numbers as the ending balance for 2021 and opening balance for 2022.  I also move the "reset" to end of 2022, etc.  
[/quote]

40% is huge. One will need a very large amount of money using this method.[/quote]

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