Retired in › 1978

Retiring in 1978: did the 4% rule survive?

Retiring at the start of 1978 with $1M and spending $40,000 a year adjusted for inflation (the 4% rule), a 100% stock portfolio lasted all 30 years, with $5.6M left; a 60/40 portfolio lasted all 30 years, with $3.1M left.

Over the first 10 years, stocks returned 8.6% a year after inflation and the 60/40 mix 6.6%. The first decade matters most: losses early, while withdrawals continue, are what break a plan.

The highest fixed rate that lasted 30 years from 1978 was at least 6% 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 1978 with the 4% rule?

Retiring at the start of 1978 with $1M and spending $40,000 a year adjusted for inflation (the 4% rule), a 100% stock portfolio lasted all 30 years, with $5.6M left; a 60/40 portfolio lasted all 30 years, with $3.1M left.

What was a safe withdrawal rate for someone retiring in 1978?

The highest fixed rate that lasted 30 years from 1978 was at least 6% with either all stocks or 60/40 (tested in 0.25% steps from 3% to 6%).