[Phallusimpudicus]

Will a box of eggs cost $6.00 a dozen when you’re 65, or will it be closer to $60? So how can we possibly know how much money we will need to live on in retirement?

https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

The Safe Withdrawal Rate is the maximum rate at which you can spend your retirement savings, such that you don’t run out in your lifetime.

If you happened to retire in 1921 on a mostly-stock nest egg, you would have experienced an enormous stock run-up for the first eight years of your retirement. You’d be so rich by the time the 1929 crash and the Great Depression hit, that you’d barely notice the trouble in the streets from your rosewood-paneled tea room.

On the other hand, if you retired in early 2000 while holding stocks, you saw an immediate and huge drop in your savings along with low dividend yields – and your ‘stash may be have had some scary times in the early days, and again around 2009. Would you still have any money left today?

In other words – the sequencing of booms and crashes matters. Ideally, you want to reach your magic retirement number in a time of nice, reasonable stock prices, just before the start of another long boom so that your retirement starts off on a good foot. But you can’t predict these things in advance. So again, how do we find the right answer?

..

the 4% value is actually somewhat of a worst-case scenario in the 65 year period covered in the study. In many years, retirees could have spent 5% or more of their savings each year, and still ended up with a growing surplus.

The trinity study assumes a retiree will:

never earn any more money through part-time work or self-employment projects
never collect a single dollar from social security or any other pension plan
never adjust spending to account for economic reality like a huge recession
never substitute goods to compensate for inflation or price fluctuation (vacation in a closer place one year during an oil price spike, or switch to almond milk in the event of a dairy milk embargo).
never collect any inheritance from the passing of parents or other family members
and never do what most old people tend to do according to studies – spend less as they age

#mrmoneymustachequotes