2021 Results for CPI, Stocks, Bonds - All Tools Updated
- January 22, 2022
- by Wealth Meta Admin
Our calculators have been updated with 2021 data for CPI, S&P 500, bond, and cash returns.
Last week we also pushed out updates to all calculators and tools.
- The Net Worth Dashboard now includes an asset allocation breakdown per account. This is useful if you want to look at asset allocation for a given account vs the big picture summary on the right.
- The Retirement Withdrawal Calculator got a minor logic adjustment so that when the balance goes negative stock/bond/cash returns no longer matter. It continues to take withdrawals (increasing with inflation) to show just how negative that retirement setup would end up.
- The Income Spending Simulator got slight UI improvements, minor bug fixes, and a performance boot.
- Our budget tracking tool is getting very near to completion! More on this when it goes live.
2021 raw numbers:
- The CPI (consumer price index) increased by 4.7% on average for the year. The big news is December's year over year inflation was a whopping 7%! The fed is going to be forced to raise rates in 2022 to counteract trend. They got themselves in trouble saying that inflation was transitory when in fact it has stuck around.
- The S&P 500 had a 28.5% return, another year and even better than 2020's return.
- The 90-day T bill had a 0.06% return (used as the cash return in our retirement calculators).
- 10 year Treasury Bonds had a -4.42% return.
COVID-19 continued to dominate life in 2021. Despite that the stock market did amazing, and even better than 2020. This illustrates the disconnect between main street and wall street. The only negative was 10 year bonds lost money. Rates are expected to rise soon to counter inflation so that may continue but with the hit priced in they may do okay next year.
The market fluctuates in unpredictable ways. Recall the saying that long term investors who set it and forget it get the best sleep.
Our retirement calculators use backtesting based on historical data since 1928. 2021 was a good year for investors and this moved the averages up a little more. When running our Retirement Withdrawal Calculator with default inputs the average resulting balance went up by $155k (+2.8%).
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 update)
Other results are exactly the same:
- Simulations Ending Above Zero (money left over) 98.9%
- Simulations Ending Below Zero (money ran out early) 1.1%
- Simulation Low -$205k
- Simulation High $16.08M
This is yet another piece of evidence that supports the idea of long term investing.
- CPI data https://fred.stlouisfed.org.
- Stock market, bonds, and cash returns are from Professor Damodaran's Historical Returns spreadsheet.