No. of Recommendations: 0
It occurs to me that one could reduce the early-years risk by varying the withdrawal percentage. It doesn't have to be a constant. The first year one could take out 2%, up it to 3% for the next year or two and then go forward with the canonical 4%.

It occurs to me that part of the assumption in taking a fixed percentage of your savings (whatever value you choose) out each year is that the price-value of your savings, and especially its increase or decrease, reflects the increase or decrease of your experienced inflation rate.

For example, if your savings increase, you will need to withdraw more. But if that is not the case (perhaps only the cost of buying a house increases, but you will not be buying houses), you need not take more. So leave it in. That way things will last longer.

Of course, even if you select 4% or 3% or whatever, if your experienced inflation rate increases, you may have to take out more, and die sooner (when the money runs out).
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.