I've been around here a long time and have followed Bengen since a few years after his 1994 discovery of "the 4% Rule". I've often commented that I find him "quirky" for a number of reasons, but that doesn't make his SWR work invalid. At any rate, despite all of that, I admit, I don't understand the rising equity glidepath.
How are you less at risk for the consequences of a market crash at age 80, say 15 years into a hypothetical 30 year retirement, than you are at 65? Yeah, you have 15 less years of spending. But you also have 15 less years for a recovery. What if you are 80 in 1966? You missed the big portfolio growth starting at your 1951 retirement. Ok, you had rising equity, but you still missed some big gains by not having your maximum equity allocation at the beginning of retirement. Now it's 1966 and until your hypothetical death at age 95, inflation, poor stock and bond returns and spending withdrawals makes it all bad. If you had that full equity horsepower from 1951, you'd be better able to ride out your financial life to age 95. Again, I don't get rising equity glidepath.
How are you less at risk for the consequences of a market crash at age 80, say 15 years into a hypothetical 30 year retirement, than you are at 65? Yeah, you have 15 less years of spending. But you also have 15 less years for a recovery. What if you are 80 in 1966? You missed the big portfolio growth starting at your 1951 retirement. Ok, you had rising equity, but you still missed some big gains by not having your maximum equity allocation at the beginning of retirement. Now it's 1966 and until your hypothetical death at age 95, inflation, poor stock and bond returns and spending withdrawals makes it all bad. If you had that full equity horsepower from 1951, you'd be better able to ride out your financial life to age 95. Again, I don't get rising equity glidepath.
Statistics: Posted by Leesbro63 — Sun Dec 01, 2024 5:29 am