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Dynamic Retirement Spending Model Calculators?
Old 08-20-2018, 12:14 PM   #1
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Dynamic Retirement Spending Model Calculators?

I suspect someone has answered this question before, but I missed it.

There are a couple methodologies, the Vanguard Dynamic Retirement Spending Model is just one https://vanguardblog.com/2017/09/07/...omment-page-8/. Basically 4% SWR with an annual upside and downside cap using remaining balance to provide automatic 'guard rails.'

I just wonder if there are calculators that show probability of success with any of the dynamic models? FIRECALC has % remaining portfolio spending model with a downside cap option, but it would be nice to model others? If push comes to shove I guess I can download return and inflation data and plow through it myself...
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Old 08-20-2018, 05:14 PM   #2
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I found this post by Big ERN to be pretty interesting on the topic, there are several follow ons too. https://earlyretirementnow.com/2017/...uyton-klinger/
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Old 08-20-2018, 06:15 PM   #3
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The Michael McClung book "Living off your money" has around 10 withdrawal strategies. I believe besides the classic Bengen 4% rule, the rest of the strategies are dynamic. Over at Bogleheads, there are many followers of the VPM strategy developed by one of their posters.
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Old 08-21-2018, 05:25 AM   #4
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Quote:
Originally Posted by Retch The Grate View Post
I found this post by Big ERN to be pretty interesting on the topic, there are several follow ons too. https://earlyretirementnow.com/2017/...uyton-klinger/
Great link-read, thanks! The illustration of how much a retire might have to reduce withdrawals and spending to avoid depleting a portfolio early is sobering. It seems there must be a dynamic model method that’s better than simple SWR, but maybe not.
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Old 08-21-2018, 05:32 AM   #5
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The Michael McClung book "Living off your money" has around 10 withdrawal strategies. I believe besides the classic Bengen 4% rule, the rest of the strategies are dynamic. Over at Bogleheads, there are many followers of the VPM strategy developed by one of their posters.
Reading up on VPW now, thanks. https://www.bogleheads.org/wiki/Vari...age_withdrawal
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Old 08-21-2018, 06:33 AM   #6
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Yes, on the dynamic models you really have to pay attention to potential large drops in real income. But that’s also what keeps you from flat running out of money in the worst case scenarios.

VPW, as with other methods based on portfolio value, will also see large drops in real income after a bad sequence of real returns. You have to think about what strategies you might use to cope if you are unlucky and run into such a sequence. With VPW it might be softened just a bit by the fact that your withdrawal percent gradually increases each year, although on a shrinking portfolio this might not be that comforting.
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