I have done a research on whether I would use up all my money selling 4% from an all SPY portolio starting from the peaks of past major financial crises of 2000 and 2008/. The answe I have found is no, I would not have used up all of my retirement fund.
Now, I am also curious whethre I would have used up my fund during different periods of time and with different rates of withdrawing. I built this app.
APP
Insctructions
- This calculator uses actual historical SPY data.
- Annually means there are 282 trading days every year.
- Withdrawal rate is per interval, meaning a 4%withdrawal rate will also apply to monthly interval if selected. If you want a 4% annual withdrawal rate but want to withdraw monthly, divide 4% by 12 and put the result into the Withdrawal Rate input.
- Stocks are assume to be tradable in very small amounts as you can buy or sell 0.001 shares of SPY ETF.
Withdrawing Interval:
Iniital Portfolio Value: $
Withdrawal Rate: %
Tax Rate on Dividend: %
Starting Date:
Iniital Portfolio Value: $
Withdrawal Rate: %
Tax Rate on Dividend: %
Starting Date:
You have selected 1999-12-21
You will withdraw $400 every 282 days.
Data Detail
Run 100 Times
Being Broke Cases
| Start Date | Broke Date | WR | FQ |
|---|
Comparing with Retiring with a all cash
Withdrawing up to 5 %, SPY has never been broke , with all cash, withdrawing 6% means 100/6 = 16.67 years of life supporting money
Withdrawing 6%
the SP500 retirement fund has been broke one time if you retired aroung 2000-04-07 and got broke around 2020-06-12, which was 20 years in span.
Withdrawing 7%
Cash can be withdrawing 100/7 = 14.28 years.
Times when SP500 retirement fund gets broke and a all-cash one does not:
- Retired on 2000-03-21 and got broke on 2013-09-04 which is 13.5 years
Withdrawing 8%
Cash can be withdrawing 100/8 = 12.5 years.
Times when SP500 retirement fund gets broke and a all-cash one does not:
- Retired on 2000-06-30 and got broke on 2011-09-16 which is 11.3 years
Withdrawing 9%
Cash can be withdrawing 100/9 = 12.1 years.
Times when SP500 retirement fund gets broke and a all-cash one does not:
- Retired on 2000-09-11 and got broke on 2010-10-14 which is 10.3 years
- Retired on 2000-08-18 and got broke on 2010-09-23 which is 10.1 years
Withdrawing 10%
Cash can be withdrawing 100/10 = 10 years.
Times when SP500 retirement fund gets broke and a all-cash one does not:
- Retired on 2000-05-09 and got broke on 2009-04-30 which is 8.9 years
- Retired on 2000-08-01 and got broke on 2009-07-23 which is 8.9 years
Conclusion
Retired withdrawing 4%, we should be fine. But wuth a withdrawal rate higher than 6%, we might need some cash.
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