Use the Shiller Data Set and you can go back as far as FireCalc. Then you can comment.
Thanks, this helps.
I set Data Set to "Shiller" and the AA to 75/25.
I didn't test every year, but I did check those where FireCalc SWR's tend to fail -- late 1960s and early 1970s. It turns out that 3.7% is the lowest number that gets through all of those years. So, if we're going to use backtesting, I'd test against 3.7% or $37,000.
The worst start year was 1966, where the $37,000 constant dollar withdrawals ended 35 years with a balance of $46,000.
That may also be the worst year for variable percentage withdrawals. The initial withdrawal is $53,000, it eventually drops to $22,800 before recovering.
Of course, the percentage withdrawals are scheduled to go to zero in the 36th year, and they do.
The VP withdrawals start at $53,000 and stay above $37,000 for 8 years.
Then they drop below, and stay below for the next 13 years.
To me, this 3.7% is a better comparison than "3% or even 2.5%".
The summary is still that percentage withdrawals have a lot going for them, but people embarking on this method should think ahead to whether they can really live on a lot less than their initial withdrawal if they happen to catch a bad retirement year. It's clear to me in this case that people who want to spend the $53,000 in the first year need some plan to live on
less than $37,000 if the need arises. Those who really need at least $37,000 in every year should not start with $53,000 in the first year.
IMO, models using percentage withdrawal methods should have an additional input of "The smallest withdrawal I'm willing to accept in any year". That would help focus the user on the downside risk.
edit: I did a little more on this. I modified the VPW worksheet to accept a minimum $ withdrawal. To offset the fact that I'd be withdrawing "too much" in some down years, I also put in a maximum $ withdrawal.
Of course, if I set the minimum to $37,000, then I need to set the maximum to about $37,000, too.
Other possibilities (all approximate) are:
Min: $35,000 Max: $42,000
Min: $33,000 Max: $46,000
Min: $31,000 Max: $51,000