Retired in › 1968

Retiring in 1968: did the 4% rule survive?

Retiring at the start of 1968 with $1M and spending $40,000 a year adjusted for inflation (the 4% rule), a 100% stock portfolio ran out in year 29, in 1996; a 60/40 portfolio ran out in year 28, in 1995.

Markets peaked late in the 1960s, ahead of high inflation and the 1973–74 bear market.

Over the first 10 years, stocks returned -3% a year after inflation and the 60/40 mix -2%. The first decade matters most: losses early, while withdrawals continue, are what break a plan.

The highest fixed rate that lasted 30 years from 1968 was 3.75% with either all stocks or 60/40 (tested in 0.25% steps from 3% to 6%).

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Questions

What happened if you retired in 1968 with the 4% rule?

Retiring at the start of 1968 with $1M and spending $40,000 a year adjusted for inflation (the 4% rule), a 100% stock portfolio ran out in year 29, in 1996; a 60/40 portfolio ran out in year 28, in 1995.

What was a safe withdrawal rate for someone retiring in 1968?

The highest fixed rate that lasted 30 years from 1968 was 3.75% with either all stocks or 60/40 (tested in 0.25% steps from 3% to 6%).