Originally Posted by Moemg
So if I just take 4% and adjust it up or down according to the year I'll be fine .Right ?
Probably, but just remember, according to Firecalc, a 4% WR for a 30-year retirement path failed approximately 5% of the time. The example I gave in an earlier post on this thread was for the case where one was continuously resetting for an additional 30 years
. Some have argued that when you reset, it is no different from a person just retiring in that year, and I agree. However, that person still has a 5% chance of failure (as do you if you reset). If you don't reset and your portfolio has grown, your withdrawal rate will be less than 4%, so your Firecalc success rate will have increased, perhaps even to 100%.
Saying it another way - imagine 20 people, one of whom will retire each year for the next 20 years using a 4% WR. According to Firecalc (and assuming the future will be no worse than the past), one of those 20 would be expected to fail. The math I used above would apply to this situation. When you reset, you are essentially starting your retirement over (assuming you still keep the 30-year horizon). It's like having an urn with 19 red balls and 1 white ball. The red balls are successes, and the white ball is failure. Each drawing from the urn (with replacement) represents a 30-year retirement path. Although on each drawing, the probability of drawing a white ball is only 5%, if at the outset you plan to make 13 drawings, there will be nearly a 50% chance of drawing a white ball (a failed retirement path).
Granted, as you age, your retirement path will shorten. An 80 year-old may choose to run Firecalc with a 15-year horizon. In this case, Firecalc gives a 100% success ratio with a 5.3% WR.
IMO, a safer plan would be: after a significant portfolio increase, reset to a WR which Firecalc says is 100% safe using the then (possibly shorter) retirement horizon.