THE END OF THE 4% RULE | Goodbye Savings
Published: 2021-08-25
Status:
Available
|
Analyzed
Published: 2021-08-25
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
Charles Schwab predicts a substantial decline in investment returns over the next 10 years.
"Charles Schwab warned that our investment returns could substantially decline over the next decade."
Pending
Vanguard forecasts significantly lower inflation-adjusted returns for US stocks (2.44%) and US bonds (0.27%) over the next 10 years compared to historical averages (7.5% for stocks, 2.43% for bonds).
"Vanguard calculated historically the markets have a real return of seven and a half percent for stocks and 2.43 for bonds suggested for inflation between January 1926 and March of 2021 but over the next 10 years they're forecasting significantly lower returns like 2.44 for us stocks and 0.27 for U.S bonds adjusted for inflation"
Pending
Charles Schwab anticipates that stock and bond market returns over the next decade will be lower than historical averages, based on their 2021 estimates.
"Charles Schwab also seconds this by saying that the market returns on stocks and bonds over the next decade are expected to fall short of Oracle averages according to our 2021 estimates"
Pending
The inventor of the 4% rule expressed comfort with adjusting it to a 5% rule, suggesting a 1% increase in annual spending while still ensuring funds last.
"he said that he would feel comfortable changing the four percent rule into the five percent rule meaning you would be able to spend an extra one percent a year and still have money left over"
Pending
Financial Samurai suggests that due to lower 10-year treasury bond yields (1.3% vs. historical 5%), the safe withdrawal rate should be adjusted down to 0.5%.
"the financial Samurai explains that the four percent rule was created during a time where the 10-year treasury bond was averaging five percent but now when 10-year bonds are paying just 1.3 percent you should plan for a safe withdrawal rate of 0.5 percent"
Pending
Susie Orman estimates that $5 million is needed to support a comfortable middle-class lifestyle in retirement.
"Susie Orman from telling people that if they want to retire in a nice comfortable middle class lifestyle they will need five million dollars"
Pending
Historically, a 20-year stock market period has never resulted in a negative inflation-adjusted return, with the worst-case being a 0.5% return during the 1960s.
"a 20-year stock market has never once produced a negative result adjusted for inflation in history and the worst case scenario ever realized so far in the market was a half a percent return adjusted for inflation however that would be a 20-year time frame during the 1960s"
Pending
The worst-case 30-year rolling period for stock market returns after inflation was 4.3%, occurring during the 1960s.
"the worst possible case 30-year rolling period was 4.3 percent after inflation and again that would be during the 1960s"
Pending
The average inflation-adjusted return over the last 30 years, including reinvested dividends, has been approximately 5.96%.
"the average return was about 5.96 percent adjusted for inflation with dividends reinvested"
Pending
Charlie Munger advises preparing for lower future stock market returns, attributing current high prices to retail frenzy and easy monetary policy.
"Charlie Munger says to prepare for lower returns because the stock market has been fueled by a retail frenzy and easy monetary policy that boosts prices beyond their fundamentals"
Pending
Charles Schwab predicts that rising inflation, slow economic growth, and high equity valuations will limit upward stock market movement.
"Charles Schwab says that Rising inflation slow economic growth and high Equity valuations will lead to less room for stocks to move upwards"
Pending
For a 100% certain 30-year retirement, spending 4% annually may be acceptable if one is willing to diversify, reduce spending during market downturns, and consider part-time work if necessary.
"if you're looking at a 30-year retirement and you want to make sure with a hundred percent certainty that you have money left over after those 30 years... spending four percent a year would be okay if you're willing to diversify cut back on your spending... and potentially get a job"
Pending
For longer retirements of 40-50 years, a safe withdrawal rate of 3-3.5% is recommended.
"if you want a much longer retirement like 40 or 50 years... then I think it's probably more appropriate for a three to three and a half percent safe withdrawal rate"
Pending