Updated Trinity Study for 2020 – More Withdrawal Rates!

bee

Using tools like Portfolio Visualizer (click on
metrics tab) an investor can review historical data on the safe withdrawal rate of their portfolio. For example a portfolio of 100% PRWCX would have a "Safe Withdrawal Rate" of 10% and a "Safe Perpetual Withdrawal Rate" of 5.6%. The rule of thumb for a Safe Perpetual Withdrawal Rate is 4% according to the Trinity Study (linked below).

Understanding these concepts is an important element of "safely" deriving a portion of one's income in retirement over a time frame of 30 - 50 years.

From the Article:

First, I wanted to see how this was working with recent stock market returns. The original study was only covering years up to 1995. I wanted to have more recent data. I wanted to make sure that the results were holding with more recent stock market behavior. So this simulation will cover returns until the end of 2019!

Secondly, the original study was only covering up to thirty years of retirement. I wanted to be sure that the portfolio can sustain withdrawals for much more extended periods. For people retiring early, I think that 50 years is not unreasonable.

The Trinity Study:
https://thepoorswiss.com/trinity-study/

The Update to the Trinity Study for 2020:
https://thepoorswiss.com/updated-trinity-study/

Here's a 4 Part Series on the Topic.

Part 1:
safe-withdrawal-rates-guide-part-1-background.html

Part 2:
https://fiprofessor.com/2019/07/14/safe-withdrawal-rates-guide-part-2-enough-data.html

Part 3:
https://fiprofessor.com/2019/07/21/safe-withdrawal-rates-guide-part-3-more-bootstrapping.html

Part 4:
https://fiprofessor.com/2019/07/27/safe-withdrawal-rates-guide-part-4-perpetual-rates.html

Sven

Thank you for the link. Have to read more.

For example a portfolio of 100% PRWCX would have a "Safe Withdrawal Rate" of 10% and a "Safe Perpetual Withdrawal Rate" of 5.6%. The rule of thumb for a Safe Perpetual Withdrawal Rate is 4% according to the Trinity Study (linked below).

davidrmoran

@bee, you have used

https://www.i-orp.com/Inflate/extended.html ,

yes?

davidrmoran

part 4 link seems ng

bee

@davidmoran,
I have. A great tool. Thanks for sharing.

msf

Part 4 link: https://fiprofessor.com/2019/07/27/safe-withdrawal-rates-guide-part-4-perpetual-rates.html

bee

Thanks @msf... I editted my post.

Rbrt

Thanks for this info. I need to work through the app David linked. I imagine it’s similar to https://www.firecalc.com/

I like the idea of using the rates the IRS uses for RMDs - Which is discussed here:
https://www.bogleheads.org/wiki/Variable_percentage_withdrawal

I am somewhat of a believer in the “Retirement Redzone” theory which says you need to be somewhat conservative in your investments in the last 5 years before retirement. But also in the first 5 years of retirement when you have 30 more years to go living off what you have.

davidrmoran

only partly similar (could not not be); give it a try

IRS rates let you rock out

ftprof conclusions quite the opposite