That’s the question asked by WSJ columnist Jason Zweig this Halloween. Scary scary stuff. I don’t know the answer and Mr. Zweig doesn’t pretend to either but he points out an interesting scenario. This scenario has to do with two people who retire three years apart, both with $1 million invested. Here’s how his scenario plays out.

Consider two hypothetical investors, each with $1 million invested in the S&P 500. They both withdraw 4% a year, in equal monthly installments, for the next 20 years.

One retires on Dec. 31, 1999, right before the bear market of 2000-02; the other on Dec. 31, 2002, shortly after that nightmare ended and a new bull market began.

The first investor would have a little more than $890,000 left after 20 years, calculates financial planner Allan Roth of Wealth Logic in Colorado Springs, Colo.

The second investor would have more than $4 million. (These hypothetical results don’t count fees, taxes and inflation.)

The Wall Street Journal (Free Link)

Using the 4% rule that’s how this situation plays out over 20 years. The 1999 retiree isn’t poor but doesn’t fair as well as the 2002 retiree simply because of timing.

Dividend only withdrawals vs. 4% Rule

I’ve changed the scenario a bit by only withdrawing dividends instead of adhering to the 4% rule. This may or may not work for you depending on when you retire and how much you get from Social Security. But, let’s say you don’t sell a single share and you’re invested the same way as in the “Luck of the Draw” scenario above.

The 1999 retiree still is worse off than the 2002 Retiree. But, not that much worse off and is still able to triple his wealth over the decades. Yes, the first retiree has a lower annual income and a smaller portfolio but it’s a far cry from losing money. It would be very difficult to hold the line when you watch your $1 million portfolio drop to $634,000 only two years after you retire. But this chart shows the strategy of buying and holding pays off in the long run. The annual income amounts do not include Social Security.

Year	Retiree 1 (2000-2024) Portfolio	Retiree 1 Annual Income	Retiree 2 (2003-2024) Portfolio	Retiree 2 Annual Income
2000	$903,000	$32,000	–	–
2001	$795,000	$27,000	–	–
2002	$634,000	$23,000	–	–
2003	$805,000	$22,000	$1,000,000	$0
2004	$879,000	$25,000	$1,087,000	$32,000
2005	$911,000	$28,000	$1,133,000	$35,000
2006	$1,048,000	$30,000	$1,306,000	$39,000
2007	$1,094,000	$34,000	$1,370,000	$43,000
2008	$684,000	$36,000	$855,000	$45,000
2009	$854,000	$33,000	$1,068,000	$41,000
2010	$974,000	$30,000	$1,217,000	$37,000
2011	$987,000	$35,000	$1,233,000	$44,000
2012	$1,134,000	$39,000	$1,417,000	$49,000
2013	$1,486,000	$43,000	$1,857,000	$54,000
2014	$1,670,000	$50,000	$2,087,000	$62,000
2015	$1,684,000	$54,000	$2,103,000	$67,000
2016	$1,867,000	$56,000	$2,331,000	$70,000
2017	$2,253,000	$61,000	$2,813,000	$76,000
2018	$2,131,000	$68,000	$2,660,000	$85,000
2019	$2,772,000	$73,000	$3,461,000	$91,000
2020	$3,186,000	$80,000	$3,979,000	$100,000
2021	$4,048,000	$92,000	$5,055,000	$115,000
2022	$3,265,000	$107,000	$4,077,000	$133,000
2023	$4,084,000	$108,000	$5,098,000	$135,000
2024	$3,108,000	$115,000	$5,652,000	$143,000

Notes:

• Portfolio values: End of year.
• Annual income: Total dividends withdrawn in that calendar year (rounded to nearest $1,000).
• Retiree 1 total income (2000–2024): $1,301,000.
• Retiree 2 total income (2003–2024): $1,496,000.
• Simulation uses Shiller S&P 500 monthly total/price returns; dividends = portfolio × (total return – price return). No shares sold.

Those charts don’t look too bad do they? The analysis above was compiled with AI. I used Grok for this. I first had it verify Mr. Zeig’s analysis and had it use the same methodology but with only dividend withdrawals. Hopefully the AI is correct!

Now, I’m not invested just in the S&P 500. I don’t even know how many of my holdings are part of the S&P 500. That will be an analysis and post for another day.