Here is an interesting article that examines how the SWR can be adjusted for various situations. http://www.fpanet.org/journal/articles/2006_Issues/jfp0806-art6.cfm The author goes through 3 scenarios - Conservative, Moderate and Aggressive with resulting withdrawal rates of 4.0%, 5.10% and 7.6%.Here is the executive summary of the article:In determining an appropriate withdrawal rate for a client, the planner must address "special situations" that can enhance or reduce the withdrawal rate. It's helpful to think of these special situations as layers in a cake. This paper, using three examples, shows how to "bake" such a cake.· The foundation of the cake is the withdrawal scheme. Four possible withdrawal schemes are presented: (1) maintaining the same lifestyle throughout retirement, (2) declining discretionary spending, (3) performance-based withdrawals, and (4) annuity-like withdrawals.· Four fundamental assumptions must be addressed that affect the withdrawal scheme chosen: the tax status of the portfolio, the client's time horizon, the asset allocation, and rebalancing. Additional enhancements or detractions from the basic withdrawal scheme include "success rates" based on historical returns, rebalancing intervals, and the desire to leave or not leave a legacy.· Based on commonly accepted factors, the base withdrawal rate is 4.15 percent.· A layer cake is built for a "moderate" client who chooses the lifestyle withdrawal scheme, along with factors such as a 94 percent success rate, the inclusion of small-company stocks, and less frequent rebalancing that boost his withdrawal rate to 5.1 percent.· The "conservative" client wants to leave a legacy and assumes a longer than 30-year lifespan, reducing her withdrawal rate to 4 percent.· The "aggressive" client assumes a shorter than 30-year lifespan, a performance-based withdrawal approach, and other factors that boost his withdrawal rate to 7.6 percent.AJ
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