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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.

The 4% Withdrawal

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 32 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.

Of 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 variation of the 4% rule, I calculated our portfolio extracting 4% per year, with our first year withdrawal being $20,000. 

See 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 balanced portfolio. 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 decades.

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But what about inflation?

During this time frame, the $20,000 first year distribution in today's inflation adjusted dollars would be about $41,674. As you can see this final withdrawal of $81,435 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 10.195% throughout this 32 year period are about the norm as you can see from the 60 year chart below.

Flexibility is the key and not panicking out of the markets during downturns.

Perhaps in reviewing these charts, you might be much closer to your retirement dreams than you realize.

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About the Authors

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance, medical tourism and world travel. With the wealth of information they share on their award winning website, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible available on their website bookstore or on

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