How do you picture a furture world where big long inflation has affected 90% of the population which has little or no savings at all?This is good. But there are two factors you are missing:A 50% stock, 50% TIPS portfolio should handle even a 10-15 year stretch of down markets + high inflation at a 3% withdrawal rate over a 30 year retirement. Spend down the TIPS (which will give you a 1% real return, at least) for 17 years at the 3% annual withdrawal rate while the stock portions recover. Yes, if the bear market lasts longer than 20 years you may run out of money at the 30 or 35 year mark, but there are no guarantees in life. IMO, the chances of dying, lawsuits, natural disasters, civil unrest and other societal calamities, are all more likely to complicate life over the next 30 years than running out of money under the circumstances I described above.
1. For large taxable accounts, big long inflation will cause big tax drag that you ignored.
2. Going from 4% SWR to 3% SWR is a 25 percent pay cut that many find objectionable. (But it does agree with my own solution to possible inflation of doing a lower SWR.)
Do you picture someone with a great amount of savings as continuing to spend 'as usual' and his or her life being completely unaffected by the general conditions of the big long inflation?
Statistics: Posted by smitcat — Mon Dec 09, 2024 10:17 am