I’ve posted Entry #88 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It’s titled Longer Retirements Don’t Cost Much More.
Juicy Excerpt: The point that I am objecting to is the idea that you need to add a lot of cash to your retirement plan if you expect it to last not until age 75 but to age 85 or 90 or 95. There’s a counter-intuitive dynamic at work here. Because of the compounding effect, some stages of retirement matter a great deal more than others. You don’t want to suffer losses in the early years. That’s why it is so important to take valuations into account when putting together a retirement plan. Price crashes always come at times of high prices and a price crash experienced in the first ten years has a devastating effect. Conversely, reducing the amount you need to withdraw during the first ten years by taking on a part-time job has a very big positive effect.