Why Adjusting Your Withdrawal Rate Is Critical
00:00:00.000 | when people think about their withdrawal rate, their early retirement,
00:00:03.360 | how does inflation play a role in all of this?
00:00:05.320 | Obviously, what you want to do is you want to adjust everything by inflation,
00:00:09.280 | right, because nothing makes sense if you look at just nominal numbers.
00:00:13.400 | The gold standard that you want to follow in every single safe
00:00:19.240 | withdrawal analysis is that, first of all, the withdrawals should be adjusted
00:00:23.520 | for inflation. And then also when you look at, well, what is my final value
00:00:27.520 | at time X, that should also be adjusted for inflation.
00:00:31.000 | It doesn't make a huge difference if your goal is to deplete your capital.
00:00:35.600 | Zero dollars 30 years from now.
00:00:38.000 | It doesn't matter if it's a nominal or real dollars.
00:00:40.680 | But if you have a goal of giving a bequest of a million dollars in 30 years,
00:00:46.400 | it makes a huge difference whether that is after inflation or before inflation.
00:00:51.880 | Everything I do is always inflation adjusted.
00:00:55.200 | Inflation adjustments have to be always in there, otherwise you're comparing apples and oranges.