I am about to blow your mind. Are you ready?
Here is the scenario:
Mr. Dickey retires in 1940 with $100,000. He then proceeds to take out 5% per year ($5,000). Each year he increases the amount by 3%. Meaning, the 2nd year Mr. Dickey took about $5150, and the 3rd year he took $5300. Etc.
Mr. Dickey also put all of his money into the S & P 500 Index (the 500 largest American stock companies).
So the question is: If Mr. Dickey lives 30 years, will he run out of money? Well let’s take a look.
So he started with $100,000, took out his withdrawals for 30 years, and ended up at the end of his life with $1,750,000.
What a minute…….What? How is that possible? He must have just gotten lucky, right? Hmmmm…. Let’s look at some other examples.
| Years Money is Withdrawn | Original Amount | Total Amount Received | Ending Value |
| 1940-1970 | $100,000 | $237,000 | $1,750,000 |
| 1950-1980 | $100,000 | $237,000 | $1,200,000 |
| 1960-1990 | $100,000 | $237,000 | $474,000 |
| 1970-2000 | $100,000 | $237,000 | $1,275,000 |
| 1980-2010 | $100,000 | $237,000 | $1,100,000 |
| 1990-current | $100,000 | $162,000 | $598,000 |
Even I, a seasoned financial advisor am amazed at these numbers. And it begs the question: What are we all so worried about?
Plan. Invest. Live.
Have a Blessed Week!
Dave
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