Safe Harbour
Recycles dryer sheets
Is anyone using Boglehead's Variable Withdrawal Percentage? I'm curious what your experiences are for longer term users. I found that this approach to determining annual withdrawals increases my spending by 32.5% (@ age 69) this year and increase every year going forward. It makes so much sense to not only consider my age in making withdrawals but also actual market performance which the 4% rule does not do. I'm guessing (as I don't have an advisor myself), that advisors hate this because they don't want to see you spend down your money, as this slowly erodes your value to them. I am using the extra money, all of that above my initial retirement plan of- 4% of initial portfolio annually adjusted for inflation, to fund some special things. First my kinds and grandkids are quite dispersed and travel is expensive so I put aside about $50K for an annual family get together. During that time every year we have a family planning meeting. Where among other things, we look at the portfolio performance and award a family dividend. Each of my kids gets up to $38K each year. We use $38K because that is what my wife and I can give each child each year ($19K*2). Our thoughts on this developed out of reading Bill Perkin's "Die with Zero, how to get all you can from your money and your life". It really makes you realize that your kids and you will get more out of their inheritance if you give it to them when they are young enough to still use it and you are around to enjoy it. If you hold for a big inheritance they will probably be too old (60-70) to really need it and you'll get no sense of their delight at having it . Of course it's a little unsettling to see the money curve pointing to zero. But there are plenty of years left to change our mind. We also made a modification to the VPW strategy in that we don't allow the withdrawals to go over 20%, like the withdrawals do in your final years with VWP, this just to adds a little flexibility in life expectancy. But once nice unexpected benefit of using VPW is that your portfolio will never run out before you die, like the 4% rule can have failures, instead your annual payments can get pretty small in a terrible SOR scenario. By the time you're 70 though you're pretty much past that potential challenge. Anyway, what have other's who use this withdrawal strategy found as little learnings along the way? BTW, I have also found that Pralana Online also does a good job at modeling the VWP strategy. I also built my own spreadsheet to do Monty Carlo simulations of VPW, as well as trying out the shared BackTest spreadsheet on Boglehead's. All of these things gave me the confidence that this was a superior strategy in my case, wanting to spend down (just to be clear spend down is another way to pass money on to your heirs) rather than pass on a portfolio at death. Let me know your experiences? I'd like to learn from them.