Simulation of super earnings in retirement

Just a quick question for the gurus?
Sorry trying not to make it how long is a piece of string type question.

What percentage share earnings/returns do people use for retirement calculation simulations?

If it helps background - super balance would be >$1.6M by late 50’s and looking to retire around this time.
Would only need the minimum annual withdrawal %.
This question is just for the share portion,

Researching say VAS ETF shows average divs average low 4 % and growth 9 %.

If I use a simulation of 3.5% div yield and 6% growth realistic / too conservative for the simulations?

I have the RE returns portion of the simulation under control and don’t plan to need lumps sums for paying off debt. PPOR and 2 x IPs.

Appreciate any input - thanks all

 

I'd suggest a sensitivity analysis - plug in a range of returns for each asset class. This way you will end up with a variety of scenarios from everything crashing/booming simultaneously to mediocre returns in some classes whilst others are rocking their socks off.

 

Some academic research suggests 4.5% plus inflation. So around 6-7%. Reason being: due to current higher valuation hence lower expected return than in the past.

 

A good benchmark is industry super return for a comparable product. Note however that the trend to reduced market returns and low inflation may overweight some longer term results eg Comaring 8 years returns is not practical. And if you used three years the 2020 year is an abnormality with low return which recovered in the period between July - December 2021

Growth should also reflect investment risk. Growth should not be a linear positive rate.
Many poor financial planner and DIY projections will use a linear constant. This is evident in the GFC. In 2008 markets fell. In 2018 the ASX recovered to its pre-GFC levels. Thats a real world example.

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