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ptheland asks,

But recent events have got me thinking. What is a SWR for a portfolio that suffers a significant loss in the year before retirement? Can you base your withdrawals on the value of the portfolio just before retirement? What would that rate look like? </b?

To address that paradox, you'd have to base your SWR on your portfolio's highest value before the big drop.

This recent article by Michael Kitces also address the problem.


Wow. And your opinion is ... ?

The biggest problem I see is how you determine valuation. In this case it's a LOT easier to figure PE backtesting than it than it is to figure it out now, with a recession that may draw valuations down. In addition, with sizable parts of allocation devoted to international funds, how do we backtest that?

For a "bulletproof" SAFE withdrawal rate under worst case scenario's I still like your "simpler" data better for now. Fewer variables to "fudge." I think you're saying "Go back a year and figure it for 29 years rather than 30" ... in effect?" It may cost .75 to 1.75% per year but a) what is safety worth, and b) you have other methods of dealing with that withdrawal rate and perhaps increasing it off of your original data, over on your website. But I'd still like your opinion.

Having said that this is an extremely interesting study. Thank you!

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