60/40 Retirement from the top in 2000 and SWR (CAD)

Investing / Others
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[Initially wanted to tack this onto an existing SWR topic, but the system asked me somewhat accusatory “do you really want to (paraphrasing) wake up about 200 people who commented on this topic before?”
Now that I’m opening a new topic the system tells me “Your topic is similar to … plenty of threads mentioning SWR …”
:person_shrugging:t2:]

Came across this on Twitter:

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(Source: x.com, further details see below*)

Details aside (currencies, markets, 60/40 implementation, what not) I found this interesting.

To be clear: Not meant as FUD. I personally don’t think we’re anywhere close to what the top in 2000 looked like.

I just find it interesting on its own.

* The original article is behind a paywall but with some poking the original text reveals:

  • the author applies the original Bengen paper for a Canadian investor
  • his 60/40 portfolio is
    • 40%: “the Canadian bond index”
    • 20%: “the Canadian stock index”
    • 20%: S&P 500
    • 20%: MSCI EAFE Index
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At first it looked scary, but then in 2014, my AHV would kick in, so the decline probably doesn’t look so bad (at 5%).

I guess this is one reason why living off the income/dividends gives you a degree of safety but you trade off with longer accumulation time.

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Interesting to have a simulation with more recent data than the original 4% SWR paper.
The decrease of the initial fund is pretty slow with this home bias and the US allocation.

By the way, how do you simulate efficiently the AHV with the missing years ?
Is there any calculator ?

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I think it‘s quite interesting that someone retiring in 2000 with 4% WR will likely make it to at least 2034.

The 4% rule still holds, even if you experience a lost decade in your first 10 years.

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You can do ballpark by estimating SWR of the AHV. For me it is around 0.7% so it bumps the 5% line closer to the 4% line.

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