Quote:
Originally Posted by Shazam
Account for 3% inflation.
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The 4% withdrawal is predicated on a 7% (or better) historical return based upon a 3% CPI. So 4+3=7% should be your average minimum return. Of course CPI varies and your actual withdrawals will vary yearly (and as you get older), but the general intent is based upon long term averages. Also why you should apparantly have a year or two cash cushion prior to retirement.
That Firecalc internet site I mentioned a few pages back also lets you play with returns, CPI, MERs, CPP/OAS, and lump sums such as major withdrawal or major inflow (inheritance), and time to retirement and time in retirement.