And being a big geek, now I can run many simulations with the data I want. So it was cool to write code related to this blog. For people retiring early, I think that 50 years is not unreasonable.įinally, I have to admit that I like to write code. I wanted to ensure that the portfolio could sustain withdrawals for extended periods. Secondly, the original study only covered up to thirty years of retirement. So this simulation will cover returns until the end of 2022! I wanted to ensure the results were holding with more recent stock market behavior. The original study was only covering years up to 1995. If the study is excellent, why did I want to redo it? I have several reasons for that.įirst, I wanted to see how this worked with recent stock market returns. Moreover, your withdrawal rate will depend on your portfolio and asset allocation to stocks and bonds. Because if you plan to retire very early, you will probably need a lower withdrawal rate. It is better to call it The 4% Rule of Thumb. They only tested simulations for up to 30 years. But this is not what the original research was about. Some people believe that the original study shows that this will sustain forever. And your withdrawal is adjusted for inflation every year. This rule states that if you only withdraw 4% of your initial portfolio yearly, you can sustain your lifestyle for a very long period. The Trinity Study is the source of the 4% Rule. I wrote a detailed article about the Trinity Study if you want more information. Finally, they also provided the terminal values of the portfolio. Indeed, it is interesting to compare the results with and without inflation. The authors also took inflation into account in the results. ![]() Also, they tested portfolios with between 0% and 100% stocks by jumps of 25%. They tested the success rates of withdrawal rates from 3% to 12%. It is important to note that the original research was not about early retirement but official retirement. Their research paper’s goal was to see which withdrawal rates people should use to sustain a particular lifestyle for up to 30 years. It is an excellent research paper done by three professors from Trinity University. I have already talked at great length about the Trinity Study. In this article, you will find how I did it and all the results I have gathered from this data! The Trinity Study It means many more withdrawal simulations than the original study. I have also considered periods as long as 50 years. This makes for much more data than the original study. ![]() Therefore, I reproduce the original study’s results with recent data, all the way to 2022! And I extended the data back to 1871. Thirty years is not enough for some people wanting to retire early. And then, they are not covering more than thirty years of retirement. First, they are only covering the period until 1995. However, there are two caveats to the original study. Although the original research was not about early retirement, it is often referred to in the Financial Independence and Retire Early (FIRE) movement! You will find the answer in this article with updated results from the Trinity Study! This study researched different withdrawal rates for retirement. Would you like to know precisely which withdrawal rate is safe and will sustain your lifestyle for a very long time? ( Disclosure: Some of the links below may be affiliate links) Retirement » Financial Independence and Retire Early The best financial services for your money!ĭownload this e-book and optimize your finances and save money by using the best financial services available in Switzerland! Download The FREE e-book Updated Trinity Study for 2023 – More Withdrawal Rates! Baptiste Wicht | Updated: 04 March 2023 |
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