1. What is P/E Retirement?

The P/E (Price to Earnings) Retirement ratio measures how many years your portfolio could sustain your current annual withdrawal rate. It's a key metric for retirement planning, similar to the P/E ratio used in stock valuation.

2. How Does the Calculator Work?

The calculator uses the P/E Retirement equation:

Where:

• \( Portfolio\ Value \) — Total value of retirement savings (USD)
• \( Annual\ Withdrawal \) — Yearly withdrawal amount (USD)

Explanation: A P/E Retirement of 25 means your portfolio could sustain 25 years of withdrawals at the current rate.

3. Importance of P/E Retirement

Details: This ratio helps retirees assess portfolio sustainability. Lower ratios indicate higher withdrawal risk, while higher ratios suggest greater safety.

4. Using the Calculator

Tips: Enter your total portfolio value and planned annual withdrawal amount. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good P/E Retirement ratio?
A: Generally, 25-30 is considered safe (4% withdrawal rate), but this depends on investment returns and inflation.

Q2: How does this differ from the 4% rule?
A: The 4% rule suggests a P/E Retirement of 25. This calculator lets you calculate your actual ratio based on your specific numbers.

Q3: Should I include Social Security in annual withdrawals?
A: Only include withdrawals from your portfolio, not total retirement income.

Q4: Does this account for portfolio growth?
A: No, it's a simple ratio. For growth-adjusted analysis, use Monte Carlo simulations.

Q5: How often should I recalculate this?
A: Annually, or whenever your portfolio value or withdrawal needs change significantly.