Our calculators have been updated with 2024 data for CPI, S&P 500, bond, and cash returns.

The story of 2024 was all about great stock market returns, lower but still not satisfactory inflation, and a bond bear market that just won't end.   The Fed cut rates from 5.5% down to around 4.25. In 2024 inflation ran at 2.9%, which wasn't ideal but a huge improvement from the 8.0% inflation we suffered through in 2022.

One pain point in 2024 was 7%+ mortgage rates which did not drop much even though the Fed rate cuts were coming in. This had two effects. The first was it priced out many would be buyers (lowering demand). The second was many would be sellers decided to stay put since their current loans were locked in at much lower rates (lowering supply). In some places the restricted supply is so bad home prices have actually gone up despite record unaffordability. 

2024 raw numbers:

•  The CPI (consumer price index) increased by 2.9%. At least inflation is going in the right direction but it is still considered elevated. The Fed has more work to do. 
   
• The S&P 500 had a 24.88% return, which is great but not record setting.
   
• The 90-day T bill had an average return of 4.97%.
   
• 10 year Treasury Bonds returned -1.64%.
   

Our retirement calculators use backtesting based on historical data since 1928. 2024 was overall a very good year to be in the markets.

When running the Retirement Withdrawal Calculator with default inputs the average resulting balance went up $90k (1.7%). The default settings are to retire with $1M (invested 70% stocks, 30% bonds), with an initial withdrawal amount of $40,000 that gets adjusted by the CPI every year, and to let it run for 30 years. 

• Average Resulting Balance    $5.30M (2017)
• Average Resulting Balance    $5.13M (2018)
• Average Resulting Balance    $5.34M (2019)
• Average Resulting Balance    $5.45M (2021)
• Average Resulting Balance    $5.60M (2021)
• Average Resulting Balance    $5.15M (2022)
• Average Resulting Balance    $5.27M (2023)
• Average Resulting Balance    $5.39M (2024)

Other results are the same, except the number of successful simulations (ending above zero) crept up 0.1% to 99%!  

• Simulations Ending Above Zero (money left over) 99%
• Simulations Ending Below Zero (money ran out early) 1%
• Simulation Low    -$202k
• Simulation High    $16.08M

In terms of the outlook for 2025, it is anybody's guess what effect the newly elected administration's policies will have on the market. On the one hand, massive layoffs at the Federal level would spike unemployment and reduce consumer spending. Tarrifs are also expected to increase prices, which will drive inflation higher and reduce demand.  On the other hand, reducing the deficit will be a long term benefit to the country's financial stability. The Fed is in a tough spot with inflation since they need to raise rates to combat it, but if the economy starts shrinking they will need to cut rates to stimulate it.

What can we take away from the 2024 update? So the 4% "safe withdrawal rate" works better than ever. The more data that gets piled on the more that number appears to prove itself out.
 

Associated Calculators:

• Inflation Calculator
• Saving for Retirement Calculator
• Retirement Withdrawal Calculator
• Portfolio Allocation Calculator
   

Data Sources:

• CPI data https://fred.stlouisfed.org.
• Stock market, bonds, and cash returns are from Professor Damodaran's Historical Returns spreadsheet.