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Vanguard came out today with a new group of 3 "managed payout funds" and the Growth and Distribution Fund has an initial payout rate of 5% per year while being billed as "providing inflation protection and capital preservation over the long term."
My question is, this sounds like the SWR retirement portfolio everybody has been talking about, but the going wisdom of that SWR is 4%. There was a post a few days ago about an article written by Sharpe at Stanford arguing a SWR of 4.46% with a series of bonds, but with no surplus at the end of the term. Does Vanguard know something we don't know that it is able to offer a 5% SWR for the long run? Granted their rate is set per calendar year and there is no guarantee that it will stay at that rate in any of the subsequent years, but doesn't any portfolio have that inherent risk (hence the success rate < 100% by FireCalc?) It's also possible they set that rate high initially to attract initial investmet, but I believe Vanguard wouldn't risk their reputation and seems confident to deliver that return in the long run. What do you think?
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