Today’s Safe Withdrawal Rates

Today, P/E10=24. Here are the 30-year Safe Withdrawal Rates using a variety of strategies.

With 2% TIPS (Treasury Inflation Protected Securities):

20% stocks with rebalancing: 4.0%.
50% stocks with rebalancing: 3.8%.
80% stocks with rebalancing: 3.3%.
100% stocks (S&P500): 2.6%.
Valuation Informed Indexing (the stock allocation varies with P/E10): just below 5.0%.

With preferred stock and corporate bonds:

20% stocks with rebalancing: 4.5%.
50% stocks with rebalancing: 4.2%.
80% stocks with rebalancing: 3.2%.
Valuation Informed Indexing (the stock allocation varies with P/E10): just below 5.5%.

Dividend Approaches:

Dividend Blend: 6.0%+.
Delayed Purchase: 6.0%.
Income Investing: 6.0%+.

Have fun.

John Walter Russell
June 13, 2008