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favorite podcast player. This is optimal finance daily episode 1206

safe withdrawal rate for early retirees

part two by the madfiantist of madfiantist.com

and I'm your host and narrator of the show

my name is Dan and I'm here every single day reading to you from some of the very best personal finance blogs anywhere.

And today's post is actually a continuation from yesterday, so if you happen to be new here, it'd be best to listen to yesterday's episode first, but if you've done that, if you're all

cut up, let's hear part two as we continue optimizing your life. Safe withdrawal rate for early retirees, part 2 by the Mad Fiantist of Madfiantist.

Predictable.

Since the real returns during the first decade of retirement are a good indicator of how likely it is that a

retiree's portfolio will last, wouldn't it be great if you could predict the next 10 years of real returns?

As Kittsus describes, to some extent, you can.

Quote, measures like Schiller PE-10 actually do a good job predicting real returns over a decade or more

which is the exact time horizon that matters for sequence of returns risk.

In fact if we look at the earnings yield of stocks using Schiller Methodology of 30-year SWR, the correlation is a remarkable.

7.

Market valuation and earnings yields at the start of retirement

are remarkably predictive of 30 years safe withdrawal rates.

End quote. There is actually a strong correlation

...