This is from a few past posts I did on withdrawal rate analysis. Any references or credits can be found there. I hope I got this right but if I didn't (my skills at notation are pretty limited) the basic idea is the same. This shows visually how sequence of returns risk can affect the success of a withdrawal rate. I did this for myself to be able to see it and I thought I'd pass it along.
Note - this is true for "one path" of particular spending of course but sometimes it shows better if one sims it out about 10,000 times in which case you get a distribution of withdrawals. The "sequence challenged" withdrawal rates would be on the left side of each distribution:
Since one never knows which path one will get in real life, one generally has to plan for that left side.
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