Originally Posted by ERD50
. Personally, I prefer to stick with a fixed/lower WR, rather than tell DW & myself, "the market was down this year, so we are cutting our budget by 5%, and then tell her the same thing for the next 2, 3 or X years". Or, to run into a short 2 year drop followed by big gains, and have to say "Hmmm, I guess we really didn't need to cut back at all the past two years - sorry." No right/wrong, no magic, just my choice and yours may be different for good reasons. The higher initial WR has it's upside also.
Obviously "you pays your money and you makes your choice" No criticism of any kind of your lifestyle choice is suggested. However due to the uncertainty of life anyone may have to cut the budget for X this year due to the need to consume more of Y. Taxes also change the budget. So IMHO the concept of "stability" in consumption is a phantom.
Can I propose a slightly different approach?
By whatever means you split your consumption into required
. You use different investment strategies for the two components.
consumption you generate from the most secure inflation protected vehicle possible. Low risk, low return. Puts food on the table and a roof over your heads.
consumption is fueled by high risk high return investments. This does expand and cut back with economic conditions and personal needs.
can obviously either be "bare bones" or close to your current lifestyle. Owning your house outright put it down as an investment to support required consumption. For many social security and pensions can fill out the remaining required consumption. Insurance can also play a part both health and long term care.
Beyond that there is absolutely no reason to worry about a stable long term SWR
. SWR is not a concept critical to variable
consumption. whether the variable is a medical emergency, a child in need of help or a trip to Tahiti its simply a different calculus.
In our personal case we found that it takes about 2/3 of our assets, considered as an income stream to fund our comfortable required
That is funded by secure "bedrock" investments. The rest is in broad based market matching stock funds, which we will liquidate as desired. .