While I was working on organizing my non-probatable assets, I read few personal finance blogs.
All say about the same:
Trinity study is obviously the best or the most popular study to determine your withdrawal rate to make sure the money will last trough the retirement time. And that is 4% withdrawal rate on $3,000,000 saved.
Some people, especially in the comments section, were concerned about market downturns which no one can ever predict.
That made me think about the market downturns.
I went to the stock charts and checked how deep did the market go while recent market "crushes".
The drawdown was about 50% for indexes. It was more variable for stocks.
Here are some of my thoughts on how to combat that:
Option 1: The downturns are temporary. I can sit them out.
Especially if I accumulated for many years and the average price will not be the top price. The 50% decrease will be from the top price (and not from the average price) and that will not be as critical after years of accumulating.
Option 2: I can increase my magic number from $3,000,000 to $5-6,000,000. That number appears to be difficult to reach, because I don't know if I even reach the $3,000,000. And I will have to call it the "super-magic number".
But if the downturn is about 50% only from the top price and it might be only about 30% from the average, I might need only approximately 30% increase in the magic number and that will be approximately $4,000,000. This is still very far out but looks more doable.
Option 3: I could create an additional source of income. Dividends would be one option. Dividends, in most cases, are paid during marked downturns and can help to bridge that time. I can't think of any other realistic options working full time.
