Quote:
Originally Posted by Doctorfever
So just to be clear, as a basic rule of thumb, I can go with the 4% rule. The day I retire, whatever my expenses are (and what I want to be able to spend), I will have enough to retire, including inflation?
I am asking because I am not well versed.
Can a person count on $650 (per person) monthly for OAS and $1200 per person who has maximized CPP?
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If you Google trinity study 4% you can get much more info but the study reviewed if you started investing at any year in the past 100 years and had a 30 year retirement and withdrew 4% of your initial investment adjusted for inflation each year what is the maximum amount you could withdraw and not be bankrupt in year 30. So if you started the day before the Great Depression or in the rapid inflation era of the 80s you would have been fine.
The big assumptions is it doesn’t account for currency risks or home country bias for Canadian investments and it assumes that past results = future results. An example of it not working would be Japan where they have had stagnant growth for a long time.
But in general the 4% rule is reasonable as a target.
For CPP you need to be careful as it essentially assumes 47 years at Max contributions with some exceptions so if you retire early you lose 2% per year of early retirement or if you have years where you did not make full Max. Also depending on age the CPP enhancement will increase that amount over the next 15 years.