File:Log4percent.jpg

This graph shows a constant percentage-type retirement withdrawal method, where the yearly withdrawal is a set percentage of the total portfolio value. And, the amount of stocks in the portfolio is decreased each year according to the formula: stock percentage=LOG(100-age)-1, which decreases stocks slower in the early years and then at a faster rate during the typical retirement years, eventually transitioning to a conservative 100% bond portfolio at age 90 and beyond. In this example, the ages covered are from 55-90.

The blue bar-graph shows withdrawals in individual years (using the left-hand scale), while the red line shows the remaining portfolio value (using the right-hand scale). Portfolio consists of 65% stocks and 35% bonds at the start, changing based on the stock percentage=LOG(100-age)-1 formula until the portfolio is 0% stocks and 100% bonds at the end. Yearly withdrawal is 4% of total portfolio value. Stocks are represented by the MSCI World index and bonds are represented by 5-year treasury notes. Timeframe is 1972-2007.