Also, the concept of SWR assumes that people have no downside flexibility (or don't want to exercise it).
But, if you have good early results, it seems that you now have downside flexibility. Why not take advantage of it?
Suppose I started at $1 million and took $40,000 in the first year because I felt that's a 95% success rate over 30 years.
Five years later, I have (an inflation adjusted) $1.5 million. Furthermore, I note that 4% has a 100% historic success rate over 25 years. Here are some non-level strategies:
1) How about "The greater of (X% of my current portfolio) or (Y% of my inflation-adjusted starting portfolio)"?
In this case, maybe X=6 and Y=2.7
I expect that backtesting that rule gives 100% historic success.
Now 6% of $1.5 million is $90,000,
and 2.7% of $1.5 million is $40,000.
So, I can take $90,000 this year, with the confidence that I can still get at least $40,000 in some future year if things go south.
2) Or, if I want to get really aggressive, why not just withdraw and spend $500,000, leaving a portfolio of $1 million with a $40,000 SWR at the 4% rate for the remaining 25 years?
3) Or, if that's too aggressive, maybe take 1/5 of the excess of my current portfolio over the portfolio I'd need to provide $40,000 at a 100% success rate for my current remaining lifetime.
4) Or, switch to VPW when my portfolio is so high that the VPW backtesting shows that even in down markets my withdrawals will stay above $40,000.
