Description:
For an inputted Asset Allocation, the Withdrawals Graph automatically calculates the Withdrawal Rate at which the portfolio value after thirty years equals $0. The graph shows real inflation adjusted portfolio values based on the Starting Value, Withdrawal Rate, and Asset Allocation inputted below.
Interpreting the Graph:
Independent portfolios are formed at the start of every month in the historical record and portfolio values are calculated using actual historical inflation adjusted returns.
The Withdrawals Graph calculates portfolio values through time for every independent portfolio. The Starting Value is invested at the beginning of the month in which the portfolio was formed and the Withdrawal Rate amount is withdrawn at the end of every annual period. The Withdrawal Rate amount is calculated as the Withdrawal Rate (%) multiplied by the Starting Value and is adjusted for inflation each year. Percentile rankings are calculated based on the portfolio values after 30 years of withdrawals.
The Withdrawals Graph shows five different historical paths of portfolio values. The Worst Case is the starting month which led to the smallest portfolio value after 30 years. Likewise, portfolio values are shown for the 5th, 10th and 20th percentile portfolio values. This aims to show you the worst case portfolio values for your Asset Allocation and Withdrawal Rate historically. The Median portfolio value is also shown as a friendly reminder that the worst case scenarios are unlikely.