So the Evil Dr. Pfau is at it again, eh? The simple answer is that nobody knows whether 1%, 4% or 8% or any other rate until after the fact. The best way to manage this is to start out with a modest number and remain agile, mobile and hostile.
Yes.
I respectfully apologize in advance for this comment, but I didn't see anything in the article that requires a CFA or PH.D. to deduce. OK, you can't just say 4% is the magic number, but what is the magic number? Where is the conclusion?
"3. The 4% rule is based on a tax-deferred portfolio. For those withdrawing from a taxable portfolio, taxes will play a bigger role than you may expect.
Not only are taxes paid on withdrawals, but taxes must also be paid on reinvested dividends, interest, and capital gains when they accrue and even if they are not withdrawn. <snip>".
I'm not getting the part about taxes being paid on withdrawals after taxes are paid on dividends, interest, and capital gains.
Further, in the grand scheme of things, is there really that much difference between 4.15% and 3.67%?
This kinda reminds me of years ago when I was in a sales support role. The district had a $35 million sales quota, and the director hosted a nice luncheon for the sales teams to celebrate making quota. After lunch one of the AE's who was responsible for probably 25% or more of that quota left the room and returned with a dessert. The district manager quickly pointed out that dessert was not included in the luncheon package. A few minutes later, during the director's presentation, the AE stood up and said "Mr <director>, is it OK to get a refill on the iced tea?"