Below are corrections and clarifications for the book.
1) Page 41. Chapter 3. Section: Interpreting the Results
The Average Remaining value is not inflation adjusted.
2) Page 110. Chapter 4: Section: Strategy 6: Endowment Formula
The Endowment Formula description is corrected below (the backtesting numbers are correct).
1. Calculate the inflation-adjusted withdrawal amount by adjusting the previous year’s withdrawal amount (or initial withdrawal amount) by inflation
2. Calculate the fixed-percent amount by multiplying the initial withdrawal rate (e.g., 5%) by the current portfolio value.
3. Calculate this year’s current withdrawal amount by adding 70% of the inflation-adjusted withdrawal amount (from step 1)
to 30% of the fixed-percent amount (from step 2).
4. Withdraw the current withdrawal amount calculated in step 3 (and save this withdrawal-amount to use in step 1 the next year).
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