Hacker News Reader

This analysis doesn't seem to account for inflation? In 40 years, withdrawing $140,000 will not be nearly as much.

For reference, inflation over the last 40 years has been 300%. So you're talking about $47k in inflation adjusted purchasing power in 40 years.

View on HN

It does factor in inflation. I am using a 3% safe withdraw rate in my calculations which is where I withdraw 3% of my portfolio balance in year one, then in year two I take that original amount and adjust it up by inflation, and continue doing this each year. So it will maintain the same buying power.

the 3% rule accounts for inflation. Average nominal return 7-10%, inflation of 3.5% average, leaves you 3% withdrawal with no decrease (or even an increase) in principle in real dollars

That's not what the 4% rule means. The 4% rule (modified to 3% by OP) is what you can withdraw without running out of principle. Maintaining the level of principle is a different thing entirely.

Average nominal should be ignored anyway. It's never been a practical number for the individual investor to rely on. Mistakes, allocation models, people having less to invest when times are bad (and market is low), etc.

Reply on news.ycombinator.com