I'd love to see links to any posts you have made on this, especially regarding your methodology. I'm curious what similar rule would correspond to a 3% SWR.
It's easier to write it out than find a link. Again, the idea is that before I retire I decide on a "floor" withdrawal rate. I plan to vary my spending depending on investment returns. I am happy spending more than my floor, but I want don't ever want to spend less than the floor.
I tried a rule which is "The greater of 6% of current balance or 3% (inflation adjusted) of original balance."
I originally tried that on a Monte Carlo system of my own, but that's kind of a black box. So I tried using the FireCalc data. I ran the standard FireCalc (all assumptions at the defaults) and clicked the "provide data and formulas in spreadsheet format" box on the Investigate page.
I moved the data to an Excel spreadsheet and extracted the annual inflation rates and investment returns. (Now that I'm remembering, I think it's easier to get these factors if I set the withdrawal rate to nearly zero.)
Then I set up a worksheet with 108 rows that ran the standard 4% withdrawals using FireCalc's formulas and spot checked the results.
Then I changed the withdrawal rule to the 6%/3% above.
My result was that no scenario ran out of money, but I did find a fair number where the withdrawals did drop to 3%. I tried to summarize the results by looking at statistics like this
Withdrawal-Amount | Yr-5 | Yr-10 | Yr-15 | Yr-20 | Yr-25 | Yr-30 |
$45,000+ | 44 | 42 | 43 | 38 | 32 | 24 |
$30,000-$45,000 | 52 | 40 | 32 | 33 | 30 | 33 |
$22,501-$30,000 | 12 | 14 | 12 | 14 | 18 | 16 |
Exactly-$22,500 | 0 | 12 | 21 | 23 | 28 | 35 |
$00,000-$22,500 | 0 | 0 | 0 | 0 | 0 | 0 |
I was using FireCalc's initial fund of $750k. So 4% = $30k, 6% = $45k, and 3% = $22,500.
The table says, for example, that I looked at the 108 possible starting years in FireCalc. When I checked the withdrawal amounts in the 15th year in each of those 108 possibilities, I found that in 43 of them I was withdrawing over $45k, in 32 I was withdrawing beteen $30k and $45k, etc. Each column should total to 108.
It looks like the 6% is a little aggressive, based on what I'd like to see. I haven't tried lower numbers, but I'm guessing it wouldn't take much to get a slightly more level payout.