I would like to spend the money, but have zero confidence in being able to finesse that. The data get so sensitive when you run these projections out over long periods of time that the only safe way to plan, I believe, is to try to keep the real value intact so that you are not slipping backwards.
Its sort of like a bottle filling up. You fill and fill and nothing seems to be happening, and then all of a sudden, whoosh, it comes flying up the neck.
My sense of these portfolio meltdowns is similar (obviously opposite!) A few high inflation years where you boost your withdrawals, a few bad years in the market, suddenly your "Safe 4% swr, adjusted up for inflation" represents 10% of your portfolio that year, but you take it anyway because the system you follow suggests it is safe. Another year or two of this and you have irreparably decimated the portfolio -- it can never recover., or at least can never pay anythying close to what you used to withdraw from it. Sure you'll get some more years out of it, there is money in the bank, but you are mostly just spending principal at that point. THe magic of SWRs that spend only the real appreciation in your portolio is long gone for you.
Then unless you have worried yourself to death during this slow-motion trainwreck, your genes keep going but you don't have anything to live off. (or if you are already elderly, you have SS.)
All this applies if you spend a lot more than SS or a pension and need your portfolio to provide you income for life. If you are happily living on the 1200 or 2000 a month you get from SS, or if you have a COLA'd pension, then you can forget all the stuff I said and just laugh at people in my predicament.
So maybe you can get to 80 years old and decide now I've only got 30 years left, it's time to start spending at an 'unsafe' SWR -- time to start pumping it up to 7 or 8%. So what do you do -- get a sportscar and start taking chicks on cruises to the Caribbean? You do that and you'll have so much fun you'll probably live to 120, with your last 10 years being in the poorhouse!
Basically anyone who is spry enough to enjoy their money is too young to really start spending down their principal. And when you aren't spry, you're not going to be able to enjoy the money anyway. Maybe save it for nursing care.
By the time you are ready to pass it on, your kids will be in their 70s or maybe even their 80s anyway. My point is not about an obligation to pass your $ to your kids, just the fallacy of willfully thinking you can hedonistically spend it down in some sort of controlled descent and run out just as you are crawling off to your grave.
Who knows the hour of their death? Even the actualrial charts are just taking the median: half the people live longer than the 'life expectancy' they are publishing.
