As I understand it, the standard 4% SWR rule allows withdrawal of 4% of asset value during the first year, then permits annual adjustments in withdrawal amount to keep pace with inflation. This limitation of withdrawal increases to inflation provides protection against future downward moves in asset values.
Is there a point at which it is reasonable to reset the original basis of the 4%? With inflation low this decade at the same time stock prices have doubled and tripled, continuing to strictly limit annual withdrawal increases to inflation makes for tiny withdrawals relative to new asset values. If I started at 4% SWR in 2010, by 2018 my withdrawal, even with inflation adjustment, has become less than 2% of the assets. It seems some reset of my SWR basis is in order (no?), especially given that presumably I have 8 fewer years of life remaining.
Is there a point at which it is reasonable to reset the original basis of the 4%? With inflation low this decade at the same time stock prices have doubled and tripled, continuing to strictly limit annual withdrawal increases to inflation makes for tiny withdrawals relative to new asset values. If I started at 4% SWR in 2010, by 2018 my withdrawal, even with inflation adjustment, has become less than 2% of the assets. It seems some reset of my SWR basis is in order (no?), especially given that presumably I have 8 fewer years of life remaining.