Page 112 - Ready Set Retire

Stephen J. Kelley
Okay, but that study was done right around 2010 before the
latest bull run? Surely it’s different now? Well, yes, but it’s still
nothing to shout about:

The market is claimed to have an average rate of return of over
8%. If you read the fine print above, the assumption is a 10%
rate of return for the S&P 500 with fees of around 1.2% Bonds
are expected to return 6.5%. Yet the plan to withdraw just 4%
with a 3% annual inflation adjustment ends up with only a 43%
chance of success!
That isn’t the worst. What really got to me was the response
from T. Rowe Price when it released the study. In the words
of Christine Fahlund, a senior financial planner at TRP,

This really boils down to cutting back on what
you withdraw…. Many of us think it's
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