A Retirement Income & Spending Plan

In the early stages of retirement planning, it makes sense to focus on accumulating sufficient assets to retire. However, when you're actually in retirement you'll find that the key is to have enough income each year to support your spending. This post adds the income calculation to the existing retirement model. (See link at the end of this post.)

Retirement Expense Graph

Retirement Spending Sources

The graph above (click to expand) shows the

April 2010 Stock Market Update

100 Year Stock Market (Dow) Chart with 25-Year Moving Average

Dow 25-Year Moving Average

Note: for a more up-to-date version of the above graph, see 2010 Year-End Stock Market Update.

Above is the chart introduced and analyzed in 100 years of stock market (Dow Jones) history -- with the addition of the 25-year moving average (click chart to expand). As before, it begins around 1900; it uses this past month for this year's close. It shows that the market rarely falls very far below its 25-year moving average. When this was originally posted, I noted that the one big exception to the rule was the crash that preceeded the Great Depression. Since February '09, I have been updating this graph approximately once a month.

March, First Quarter/Year-To-Date & Recovery-To-Date Review

In early March 2009, I posted Dow At 25-Year Moving Average. The Dow continued lower for several more days before bottoming at 6547 on March 9 --

Dow Price/Dividend Ratio and Dividend Yield History (thru 2012)

This post graphs stock market dividend yields since 1900 and shows that they are at historically low levels. Since the price/dividend ratio is the inverse of dividend yield, valuations based upon p/d ratio are at an all-time high. Historically, expensive markets such as these have produced disappointing long-term returns.

I've argued elsewhere that valuation is important -- it is important not to overpay for investments. A common basis for valuation is earnings; investors decide how expensive the market is based upon how much one has to pay for one dollar of earnings -- the price / earnings ratio. In this blog, I refine that a bit and look at normalized price/earnings ratios. (About Normalized P/E Ratios describes my normalization process.) However, this is not the only way to assess valuation. Another popular valuation metric is the price/dividend ratio -- how much must an investor pay for one dollar of dividends (or, conversely, what is the investor's dividend yield)?

100 Years of Stock Market Price/Dividend Ratio History

Dow Price/Dividend Ratio History

The above chart (click to expand) shows the 100-year history of

The 10-Year Stock Market Projection

This post presents my "official" projected stock market returns for the 10 years beginning in January 2012. It also compares previous 10-year projections with the actual results.

Note: I do this "formal" projection once a year when earnings are published.  For the most recent informal (& text-only) monthly update, see March, 2013 Stock Market Performance . 

Projected 10-Year Stock Market Returns

Projected Dow 10-Year Returns

The above graph (click to expand) shows my projected returns for the DJIA (Dow Jones Industrial Average) for the twelve 10-year periods beginning end-of-year 2000 through end-of-year 2011. The blue dashed line shows the returns that I estimated that a hypothetical investor in the stock market would receive over the next ten years 

March 2010 Stock Market Update

100 Year Stock Market (Dow) Chart with 25-Year Moving Average

Above is the chart introduced and analyzed in 100 years of stock market (Dow Jones) history -- with the addition of