Comments on: The Trinity Study Updated for 2018

By: Zach

Zach — Thu, 26 Jul 2018 18:43:14 +0000

In reply to J.D. Roth. Thanks for the heads up J.D., I believe you are correct. Pfau did mention that the 4% rule first arose from Bengen's work. Good call!

By: J.D. Roth

J.D. Roth — Thu, 26 Jul 2018 18:39:07 +0000

One minor correction: The Trinity Study is not the source of the 4% rule. It’s my understanding that the 4% rule was first articulated by William Bengen.

By: Zach

Zach — Thu, 26 Jul 2018 17:19:41 +0000

In reply to Mike @ Balanced Dividends. The 92% survival rates for 40-year periods for 75% stock allocations and 4% withdrawal rates is definitely an encouraging number, especially with retirements potentially lasting much longer than historically. Also earning some active income in retirement would make these numbers even more assuring. Thanks for the feedback as always, Mike!

By: Zach

Zach — Thu, 26 Jul 2018 17:17:59 +0000

In reply to APurpleLife. Glad you found this useful! As you said, the results are pretty encouraging for 4% withdrawal rates but there's no guarantee that the future will resemble the past.

By: Mike @ Balanced Dividends

Mike @ Balanced Dividends — Thu, 26 Jul 2018 16:10:44 +0000

My eye went immediately to the 92% value / cell in the 75% stock allocation table in the 4% column. That seems like a sweet spot. Of course, your time horizon etc. will come into play.

Ideally, everyone would never have to touch their actual holdings and just live off the income!

Thanks for the post – good stuff as usual. – Mike

By: APurpleLife

APurpleLife — Thu, 26 Jul 2018 15:53:29 +0000

Oh wow I hadn’t heard the study had been updated! Thank you for sharing and for doing your usual awesome and thorough analysis. I thought reading the findings would make me want to edit my plan to be more conservative (currently planning to retire and pull 4% with a 100% stock portfolio). This was a pleasant surprise! Though the past can’t predict the future I feel more comfortable with my plan now. Thank you!

By: Josh

Josh — Thu, 26 Jul 2018 12:55:06 +0000

In reply to Hamster.

Hamster, you are right that it “seems” that way… But Bonds have been paying terribly (compared to long term averages) for over a decade now. IIRC, bonds paid 5% on average in the original Trinity Study. No wonder the 4% rule worked, if you were able to get a steady 5% return from the “safe” part of your investments.

By: Hamster

Hamster — Thu, 26 Jul 2018 12:38:24 +0000

Wow, awesome to get an update on the Trinity study! Thanks!

I’ve gone through Jim Collins’s book The Simple Path to Wealth and he mentioned the Trinity study as well. He proposed a 100% stock portfolio during the accumulation phase, but DID mention that holding a 90/10 stock/bond did seem to outperform the 100/0 portfolio somewhat. It seems that with more recent data available, the split to a more bond-heavy porfolio (like 75/25) seems to be the more optimal route to take, something to keep in mind going forward!
Cheers,
Hamster