From my web site (unedited):If Only 30 YearsEarly studies claimed incorrectly that the optimized 30-year Safe Withdrawal Rate was 4% of the original balance (plus inflation). It was lower. My research restored the 4% withdrawal rate and it has now lifted the continuing withdrawal rate above 6%.In If Only 4% I found that you could reach a 50-year 4% Safe Withdrawal Rate without owning any stocks whatsoever. You could easily reach a 50-year Safe Withdrawal Rate of 4% (plus inflation) if inflation remains inside a range of 3% to 4%. You could come close to reaching a 50-year Safe Withdrawal Rate of 4% (plus inflation) even with an inflation rate of 5% assuming that I am right about the effect of reinvesting in preferred stocks instead of TIPS.What if 30 years is enough? You can withdraw 4% of your original balance (plus inflation) at much lower interest rates and/or at an even higher rate of inflation.Simplified Automatic AllocatorI examined conditions on my Simplified Automatic Allocator. It allows you to enter two portfolios, a TIPS interest rate, an inflation rate and an inflation adjusted (real) withdrawal rate and see how well your account holds up. It uses a TIPS account for cash management. This is necessary in order to make calculations. In reality, you would reinvest surplus funds into your regular investments. Surplus funds in the early years go into the TIPS account. They are drawn down in the later years to cover shortfalls that, in this case, result from inflation.I assumed an initial balance of $100000 and a withdrawal amount of $4000 (plus adjustments to match inflation). These numbers scale. This corresponds to a 4% withdrawal rate, in this case, lasting 30 years. I never sold the original investment. Its buying power was reduced by inflation.DataTIPS interest rate: 0%.3% inflation: 6.0%.4% inflation: 6.7%.5% inflation: 7.5%.6% inflation: 8.3%.TIPS interest rate: 1%.3% inflation: 5.9%.4% inflation: 6.5%.5% inflation: 7.2%.6% inflation: 7.9%.TIPS interest rate: 2%.3% inflation: 5.7%.4% inflation: 6.4%.5% inflation: 7.0%.6% inflation: 7.6%.TIPS interest rate: 3%.3% inflation: 5.6%.4% inflation: 6.2%.5% inflation: 6.8%.6% inflation: 7.4%.AnalysisYou can buy investment grade preferred stocks with dividend yields of 7.5% to 8.0% and higher. You can reach every number in the table except 6% inflation and a 0% TIPS interest rate. In addition, you can buy TIPS at a 2% real interest rate, assuming that you are patient.ConclusionsYou can reach a 30-year 4% Safe Withdrawal Rate easily without owning common stocks.Experienced fixed income investors should be able to do much better than I have indicated. They will construct ladders, vary maturities and lock in favorable interest rates, as needed.Have fun.John Walter Russell
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