Kitces: How the 4% rule has held up since 2000 & 2008

[shotgunner]

I know this may seem to be an obvious question. When the author states subsequent years are increased by an inflation rate what measure is he using for this study, I don't see it cited. Is it CPI, PPI or something else? I used an annual increase of 2% but based on 7 years of personal spending in semi-ER even 2% a year is too generous for me. 1.2 percent a year is my 7 year running average.

 

[big-papa]

I know this may seem to be an obvious question. When the author states subsequent years are increased by an inflation rate what measure is he using for this study, I don't see it cited. Is it CPI, PPI or something else? I used an annual increase of 2% but based on 7 years of personal spending in semi-ER even 2% a year is too generous for me. 1.2 percent a year is my 7 year running average.

Most articles I've read use CPI-U. As others have noted, one's personal inflation rate is going to deviate from that. For me at least, if following this sort of withdrawal methodology, I'd use my personal inflation rate rather than published inflation rates. For backtesting, since I'm not yet retired and I've not tracked personal inflation, I also use CPI-U.

 

[GravitySucks]

You didn't ask me per se, but yes. Why? Because this isn't an unchangable path. You can drive failure modes to zero by modifying any number of things including spending, withdrawals, asset allocations, etc., in the already unlikely event that it becomes necessary. That's just me, and I don't plan to 100% by FIRECalc or anything else anyway... for now!

+1. Plans are not static. My plan B and plan C lifestyles would still be quite comfortable and enjoyable. In fact i may move to plan B because its looking more enjoyable than plan A. It gets down to about plan G (building a sod house out on the prairie) when things get dicey.
Non market disasters are more likely to derail a 4% WR life. YMMV.

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