Humberto Cruz on variable withdrawal rates

[sgeeeee]

Ok I understand the variable WR concept.
What I need now is a calculator that will factor in
portfolio growth- effect of inflation on portfolio.

I want to compute a VWR of 2% with assumed return of 6% and assumed inflation of 3%

Where can I find that?

If I understand you, you want to simulate what the variable withdrawal would do to you over time. You can use FIRECALC to look at this. Just set your withdrawal rate to zero and use the expense ratio to reflect the actual expense ratio plus your variable withdrawal rate.

Now comes the tedious part. . . You have to run the detailed simulation then cut and past the results into a spreadsheet. Then you can use the maximum and minimum function to identify the highest and lowest portfolio values. Your highest and lowest historical withdrawals would simply be your variable withdrawal rate times the portfolio value.

 

[sgeeeee]

Heres the original posting that looks at the effect of mixing the conventional inflation adjusted SWR with the variable SWR. You don't have to look on intrcst's board if you don't want to:

http://early-retirement.org/forums/index.php?topic=2048.0

My personal withdrawal strategy has been to spend money when I want to. But I always check the result against the more idealized models.

The simulations described in the link above were an attempt to examine the spending model that a number of posters seemed to be describing. They have a basic budget that they don't want to compromise on and a more discretionary budget that they could do without if the option were to go back to work. The simulations do not account for the impact of following the advice of a stuffed beaver.

 

[RatherBeFishn]

Has anyone read the Paul Merriman book Humberto Cruz also recommended in this article? Live it Up without Outliving Your Money! : 10 Steps to a Perfect Retirement Portfolio

Comments on the book?

 

[Patrick]

When we modelled this with 75+ years of historical data, the results were encouraging -- it shaved maybe 2/10s of a percent off the Safe Withdrawal Rate.  Success rates dropped a few percent in some cases, no change in others.

ESRBob, what did you use to do the modelling? Can I buy the program somewhere?

Thanks,

Patrick