Sound Investing Boot Camp #6 Fixed Distributions
Mar 11, 2026
A deep dive into what happens when retirees take fixed, inflation-adjusted withdrawals from a $1M portfolio starting in 1970. Short tests compare 3%, 4%, and 5% draws and show how a 1% difference can change heirs' legacies by millions. Side-by-side results pit the S&P 500, mixed stock-bond splits, and a global four-fund strategy to reveal the role of diversification and sequence-of-returns risk.
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Starting In 1970 Reveals Sequence Risk
- Running retirements starting in 1970 tests extreme sequence-of-return risks like the 1973–74 bear market and double-digit inflation.
- Paul Merriman shows a $1M portfolio across 30 years captures both brutal early losses and later big bull decades, exposing withdrawal vulnerability.
Match Equity Exposure To Withdrawal Vulnerability
- Choose an equity-bond mix to balance capturing market returns and protecting against collapse during big early losses.
- Paul Merriman models 40/60, 50/50, and 60/40 stock-bond mixes to illustrate trade-offs.
Adjust Withdrawals Annually For Inflation
- Use inflation‑adjusted fixed distributions by increasing each year's withdrawal by prior-year inflation to preserve purchasing power.
- Example: $30,000 initial withdrawal rose to over $130,000 by year 30 in Paul Merriman's historical simulation.