Retirement; like your parents, but way cooler
In 1991 Billy and Akaisha Kaderli retired at the age
of 38. Now, into their 4th decade of this
financially independent lifestyle, they invite you
to take advantage of their wisdom and experience.
Billy and Akaisha Kaderli
I thought it would be a good practice exercise to
see how our portfolio would have held up and performed during the
30 years of
retirement that we have enjoyed. In this exercise, we would have stayed
fully invested through all the markets' highs and lows. As you can see from the chart,
our portfolio would have done quite well.
course at the time we had no idea about the future and our crystal ball is
no better today in making 30 year predictions than it was then. But back in 1991 -
based on history - we believed we were in good financial shape.
Let me explain
On the day we retired in January, 1991, the
S&P 500 closed at 312.49, producing a 33.20% return for that year. Using a
the 4% rule, I calculated our portfolio extracting 4% per year, with our
first year withdrawal being $20,000.
this chart below.
S&P Annual Return Year# Net Worth Year 4% Cash
Again, this exercise is assuming
that we were 100% invested in the S&P 500 Index through the entire market cycle, and
that we withdrew 4% annually.
Today we have a more
Our actual spending has been much less over the years, so there is
room for us to kick it up a bit. Maybe 5%?
The net worth value on the chart, is the amount
after pulling out the 4% spending figure on January
1st of each year and illustrates the effect of compounding though these
But what about inflation?
During this time frame, the $20,000 first
year distribution in today's inflation adjusted dollars would be about $38,004.
As you can see this final withdrawal of $77,722 far outpaces inflation.
Most of you will have a
Social Security payment
as well, and
possibly pension income added to these amounts listed in my chart above.
The annualized returns of 10.592%
throughout this 30 year period are slightly better than the norm as you can
see from the 60 year chart below.
Flexibility is the key and
out of the markets during downturns.
Perhaps in reviewing these charts, you
might be much
closer to your retirement dreams than you realize.
About the Authors
Early Lifestyle appeals to a different
kind of person – the person who prizes their
independence, values their time, and who doesn’t
want to mindlessly follow the crowd.
Retire Early Lifestyle Blog
About Billy & Akaisha