No. of Recommendations: 1
What is generally referred to as the 4% SWR assumes that a person starts with a withdrawal of 4% of the principal balance, then increases the withdrawal each year by the rate of inflation. Based on different equity versus fixed allocations, the data for the past 100 or so years shows the survival rates for such a plan. My question is whether anyone has studied the data to see what the survival rates would be for similar asset allocations where 4% of total principal is withdrawn each year, without fixed adjustments for inflation. Since the portfolio balance would rise and fall in relation to stock/bond performance in any given year, this could result in there being some years where the withdrawal amount would be less than the previous year. By the same token, it could be more...up and down over time. I'm curious whether the survival rates for the straight 4% withdrawal are better or worse than the inflation adjusted method. Does anyone know of any studies on this issue? I'm just curious to see whether a straight 4% does better or worse based on any 30 or 40-year period over the past 100 years or so, similar to the studies done on the inflation adjusted method. Thanks.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
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.