motivated by a discussion on NFB
Maximum Rate of Withdrawal
Once upon a time I did a spreadsheet that, among many other things, calculated the Maximum Withdrawal Rate ...
>What! Safe Withdrawals, again?!
I now have a spreadsheet which does only the Maximum Rate of Withdrawal.
>And that means ... what?
Assume you start a portfolio in, say 1960 and withdraw a percentage of your original portfolio, increasing that amount each year with inflation.
"What withdrawal rate would have reduced your initial portfolio to $0, after umpteen years?"
We might also ask:
"What withdrawal rate would have reduced your initial portfolio to X% of its original value, after umpteen years?"
We might also want ...
>Can you just show a picture of the spreadsheet? A picture is worth a thousand ...
Here's a picture:
Here's what you do:
Then you get a chart of the Maximum Rate of Withdrawal starting at each year since 1928.
- Pick 4 (of 8 possible) assets Example: 1, 2, 3 and 4
- Pick the percentage allocation devoted to each Example: 25%, 25%, 25% and (of course!) 25%
- Pick a number of years Example: 30 years
- Pick how much you want left, after those years have elapsed Example: 25%
- Click the Calculate MRW button.
You also get a chart of what'd happen to a $1.00 portfolio had you withdrawn that MRW, from some year you select. Example: 1960
>And there's a money-back guarantee on the accuracy of the spreadsheet?