In view of the fact that a fee of 1% percentage of the portfolio does not reduce a constant-dollar WR by the same amount, I thought of this idea.
Suppose your WR is composed of two parts: one is a constant dollar amount to represent basic necessities, and another component for discretionary spending and this is a percentage of the present value of the portfolio. Is this not analogous to what people do in practice? During good times, your portfolio grows and you permit yourself to spend more. During bad times, your stash shrinks, and you cut back on luxury items.
So, using the investing fee to model that variable spending (you pay yourself instead of the FA), I made several runs with FIRECalc. The portfolio is set to $1M, with an AA of 50/50. The variable spending component is set at different levels from 0% to 2%. Then, I looked for the maximum constant-dollar WR that results in 100% success over 30 years. The results are as follows.
Case A: $37,939 + 0.0%
Case B: $35,688 + 0.5%
Case C: $33,511 + 1.0%
Case D: $31,406 + 1.5%
Case E: $29,380 + 2.0%
In the last case, you will start out spending $29,380 + $20,000 = $49,380. At the end of the 30 years, in the worst case you will be broke, and the last year of your life you will be spending just $29,380. In contrast, in case A, in the worst case, you still enjoy $37,939 before you croak.
Initial / Worst case
Case A: $37,939 / $37,939
Case B: $42,939 / $35,688
Case C: $43,511 / $33,511
Case D: $46,406 / $31,406
Case E: $49,380 / $29,380
So, this is a form of variable WR. In the worst case, it looks like a milder form of Bernicke's spending model. The difference is that it adapts to the actual portfolio performance as time progresses. If the market is good, you allow yourself to spend more.
So, what happens when it is not the worst case? For Case E, FIRECalc says
The lowest and highest portfolio balance at the end of your retirement was $159 to $3,078,587, with an average at the end of $920,685.
This means that on average, at the end of 30 years, you are still spending ($29,380 + 0.02 x $920,685 ) = $47,794. And in the best case, you will be spending ($29,380 + 0.02 x $3,078,587 ) = $90,952.
Well, actually in that best case you can spend a whole lot more than $90,952 out of that $3,078,587 because your days are numbered. It is not likely you will be thinking much about spending at that advanced age.
What this means to me is that if you are willing to cut back your spending to only 3% of your initial portfolio value in bad times, you can spend another 2% on discretionary and will not go broke before 30 years.