Your Retirement Math Cannot Rely On Past Returns

India's short market history and the falling rate of returns make the 4% rule unreliable

- Ravi Saraogi

How much can an Indian retiree withdraw each year without exhausting their savings? Unlike in developed markets where long-term data helps answer this question, India's limited market history and falling asset returns make the past a poor guide.

In markets like the US, financial data stretches back over a century, providing a robust base for empirical research. William Bengen leveraged this long history in his landmark study on safe withdrawal rates. Analyzing rolling 30-year retirement periods, he found that a 4% initial withdrawal—adjusted annually for inflation—would have preserved a retirement portfolio across all historical scenarios. This insight became known as the "4% rule."