1871-1980 20-Year WFAIL Tables
Posted: Mon Apr 05, 2004 7:02 pm
These tables are helpful in the design of a retirement strategy.
These were run on the JanSz-Chips Deluxe V1.0B modified version of the Retire Early Safe Withdrawal [Rate] Calculator, Version 1.61, 7 November 2002. They could have been run on any version, including the original.
The WFAIL50 portfolio consisted of 50% stocks and 50% commercial paper. The WFAIL80 portfolio consisted of 80% stocks and 20% commercial paper. These portfolios are identical to HDBR50 and HDBR80, respectively. The special nomenclature is because they are measured over a 20-Year time frame instead of thirty years.
These 20-year Historical Database Rates (as a percentage of the portfolio's initial balance) are shown under WFAIL50 and WFAIL80. All portfolios survived for 20 years at the withdrawal rates in the tables. At a withdrawal rate of 0.1% more than what is listed they would have failed.
WFAIL is somewhat of a misnomer since it indicates portfolio survival. Failure occurs at a withdrawal rate that is 0.1% greater.
Both portfolios were re-balanced annually. Withdrawal amounts were adjusted each year to match inflation. That is, the real dollar buying power remained constant. Inflation was measured by CPI-U. The expense ratio was 0.20%. The initial balance was set at $100000 to keep the effects of rounding and truncation errors to a minimum. All interest and dividends are reinvested. Other values were left at their default settings.
The values of P/E10 were taken from the calculator. They are identical to Professor Shiller's numbers internally, but they are rounded to a single decimal value for the table. The source of P/E10 values from 1871-1880 was not explained.
These values differ somewhat from similar conditions using FIRECalc. That is due, in part, to slight differences in how withdrawal amounts are applied.
Have fun.
John R.
These were run on the JanSz-Chips Deluxe V1.0B modified version of the Retire Early Safe Withdrawal [Rate] Calculator, Version 1.61, 7 November 2002. They could have been run on any version, including the original.
The WFAIL50 portfolio consisted of 50% stocks and 50% commercial paper. The WFAIL80 portfolio consisted of 80% stocks and 20% commercial paper. These portfolios are identical to HDBR50 and HDBR80, respectively. The special nomenclature is because they are measured over a 20-Year time frame instead of thirty years.
These 20-year Historical Database Rates (as a percentage of the portfolio's initial balance) are shown under WFAIL50 and WFAIL80. All portfolios survived for 20 years at the withdrawal rates in the tables. At a withdrawal rate of 0.1% more than what is listed they would have failed.
WFAIL is somewhat of a misnomer since it indicates portfolio survival. Failure occurs at a withdrawal rate that is 0.1% greater.
Both portfolios were re-balanced annually. Withdrawal amounts were adjusted each year to match inflation. That is, the real dollar buying power remained constant. Inflation was measured by CPI-U. The expense ratio was 0.20%. The initial balance was set at $100000 to keep the effects of rounding and truncation errors to a minimum. All interest and dividends are reinvested. Other values were left at their default settings.
The values of P/E10 were taken from the calculator. They are identical to Professor Shiller's numbers internally, but they are rounded to a single decimal value for the table. The source of P/E10 values from 1871-1880 was not explained.
These values differ somewhat from similar conditions using FIRECalc. That is due, in part, to slight differences in how withdrawal amounts are applied.
Have fun.
John R.