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Bill Bengen's sliding SWR method
Old 12-04-2013, 05:10 PM   #1
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Bill Bengen's sliding SWR method

I subtract our expense and tax ratios from the SWR to find our highest net SWR. Check out and comment on the following:

Age % Stocks SWR
55 65 4.2
60 60 4.3
65 55 4.4
70 50 4.5
75 45 5.0
80 40 5.2
85 35 5.5
90 30 6.0
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AA = 60/35/5. Expected CAGR = 5.7%. GSD (5y) = 7.8%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.5%. Net Port Yield = 1.7%. Term = 36 yr. FI Duration = 4.9 yr. Portfolio survival probability = 86%.
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Old 12-04-2013, 07:59 PM   #2
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-I'm advising my MIL' on her finances, and we're using Bengen's numbers just like you are. Because it's not my money, I feel more comfortable sticking close to the recommendations of somebody who has done some research and has some credibility. At least it it blows up, I'll have a thin reed to hide behind.
- With our own money we'll probably use Bengen's withdrawal rates as a guide. I think they may overstate safe withdrawal reates going forward, so I'll use them for our pre-SS years and then probably cut back to about .5% less. We'll also keep higher equity exposures later into the game than he recommends (at least if Social Security and the pension promises remain unbroken).

A previous post on Bengen and the derivation of his numbers.
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Old 12-04-2013, 08:30 PM   #3
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Quote:
Originally Posted by galeno View Post
I subtract our expense and tax ratios from the SWR to find our highest net SWR. Check out and comment on the following:

Age % Stocks SWR
55 65 4.2
60 60 4.3
65 55 4.4
70 50 4.5
75 45 5.0
80 40 5.2
85 35 5.5
90 30 6.0
Sorry, I don't have the link for this, but I think Michael Kitces has a paper that shows the effect of

If you have a super low expense ratio like 0.1% it probably is a simple subtraction, but a high ER like 1% doesn't subtract the full 1% to get the net Safe WR - it was something in the ballpark of 0.65%. Something like that anyway.
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