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What if our S&P 500 retiree retired on January 1, 2000 and commenced taking distributions at a 4% rate? Since he is 100% in S&P 500 and that market gauge was essentially flat for the decade, wouldn't our retiree have lost much of his original account balance, and continuing his original withdrawal rate in dollars, be looking toward zero?

That's why it is so important to be smarter about withdrawals and account balance changes. I like the Guyton/Klinger rules which place "guardrails" around your withdrawals.

The rule that would have kicked in here would have reduced the withdrawal amount when the account balance dropped so low that the withdrawal percentage hit 4.8% (20% higher than the 4% SWR). That would probably have been triggered several times on the way down.

The flipside rule would increase the withdrawal amount when the account balance grows such that the withdrawal percentage hit 3.2% (20% below the 4% SWR).
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