With an annuity calculator I can calculate how much money do I need to collect so I can retire and live off it.

I can estimate my monthly living expenses and my remaining lifespan. But I have no good idea how much inflation adjusted return should I expect on it. I would need to hoard half the amount of money if I can have 3% real return instead of 0%.

If we assume a typical 50/50 post-retirement portfolio composed of stock and bond index funds, what percentage of real returns to should I calculate with when planning retirement?

1 Answer 1


Have you heard of the 4% rule? It basically says that you won't run out of money if you withdraw 4% of your savings each year.

Of course, this is just a guideline of where to start your analysis and is not an actual prediction of what is going to happen in the future. Some people think the 4% rule is too conservative and others think it is too risky.

You could try to calculate a precise number based asset allocation etc., but you'd have to make many assumptions about the future so it is hard to come up with an accurate estimate.

  • 1
    The amount of withdrawal depends on your expected remaining lifespan. If you have 20 years left, you probably deplete your retirement fund faster, than early retirement where you have 50 years left.
    – Calmarius
    May 17, 2019 at 7:39
  • @Calmarius, true, but since we don't know when we'll die, we need to plan to live a long time. You could live to 100. I'm not sure of the details offhand, but the 4% rule might be constructed for a person retiring at a typical retirement age. Again, it is just a starting point.
    – minou
    May 17, 2019 at 12:06
  • So with 4% rule: For 25 years: it's 0% real growth. For 30 years it's 1.26%. 40 years: 2.59%, 50 years: 3.23% needed to sustain. The article you linked mentions that portfolios are not depleted until 33 year even the worst recessions. That suggests a 2-3% real growth.
    – Calmarius
    May 17, 2019 at 13:21

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