Year 15 Retirement Risk Evaluator

Use the Stock Return Predictor [Stock Returns button on your left] to convert between P/E10 and the current S&P500 index level.

Today's P/E10 is 28.

A typical level of P/E10 is 13 or 14. A bargain level of P/E10 is 8. Prior to the bubble, P/E10 ranged between 5 and 27.

Enter your stock allocation, TIPS interest rate (2% is a safe choice, looking forward) and your portfolio's balance at Year 15 for four conditions. Then press Calculate.

You can also choose optimized Switching Algorithms A and B. Refer to Current Research A and B for development details. Switching Algorithm A limits stock and TIPS allocations to 25% to 75%. Switching Algorithm B allows allocations to vary from 0% to 100%. The optimal settings, looking forward, should be similar, but not identical. The optimal conditions are broadly defined. Knowing the exact optimum is not important. Varying allocations with P/E10 is very important.

The probabilities are roughly 5%, 20%, 50%, 80% and 95%. For example, the Safe Withdrawal Rate has a 95% chance of success. The Most Likely rate has a 50% chance of success.

You can find additional details under the Year 15 Calculator A in the Current Research H: The Big Project.