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Reply to "And that’s the $5M point "
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[quote=Anonymous][quote=Anonymous][quote=Anonymous]The 3/4% percent “rule” is based on zero growth upon retirement. Basically, moving all investments to cash upon retirement. Its simple at best but a foolish strategy [/quote] This is incorrect. The 4% rule assumes a portfolio, typically invested in 50% stocks and 50% bonds, will achieve an average annual return that exceeds inflation by roughly 3 to 4%. If you move your investments to cash, then as inflation rises your money isn't keeping up with inflation, giving you less buying power over your remaining years. [/quote] Yes. I’ve noticed over the years on boards like this that people confuse different “4% rules”. What works (according to the models & for a 30 yr retirement) is investing in a mixed portfolio, removing 4% the first year, then increasing the dollar value removed each year based on inflation. A “4% rule” that doesn’t adjust yearly for inflation is meaningless since inflation can vary widely [/quote]
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