My question may have been discussed before (if so, sorry!) but what is the right (or best) way to adjust your initial SWR for inflation in subsequent years? Say you begin with a SWR of 4% of 500,000 portfolio the first year, for $20,000. If inflation is then 3%, do you:
1) take out 4.12% of portfolio balance the second year, which if grows 8%, minus initial 20K leaves 520K for a second yr. w/drawal of $21,420; or,
2) take out 3% more of the initial w/drawal, for $20,600.
Are there other options? Which is the best for long term succcess? Thanks.
Astroboy
1) take out 4.12% of portfolio balance the second year, which if grows 8%, minus initial 20K leaves 520K for a second yr. w/drawal of $21,420; or,
2) take out 3% more of the initial w/drawal, for $20,600.
Are there other options? Which is the best for long term succcess? Thanks.
Astroboy