If you're good with Excel, I think you can duplicate FireCalc for a little testing with an Excel spreadsheet. The key is that FireCalc gives you the option of downloading a detailed sample calculation, and you can back out the formulas, extract the assumptions, and change the spending rule.
(I tried this some years ago and I think I was fairly successful.) Of course, then we get into the "easy" issue
While it's not automatic, I finally got around to creating some runs to take a stab at this. I started with that 1973 output, and you see (and it can be seen on the graphs, kinda, if you squint), that the portfolio takes a major hit in the first few years, and that's is hard to recover from.
So here's what I got (maybe this should be a separate thread?):
I first found that you can hit 100% success with a straight $35,947/$1,000,000 spend/portfolio (so 3.595% WR).
Since that drop hits early, I modeled starting at $40K/$1M (4%), cutting to $20K (2%) in 2015. Through trial/error found I needed to do this for so 6 years just to get back to 100%. I 'undid' the spending cut by adding it back as pension in year 2021.
FIRECalc: 4% - 2% - 4%
40K/1M, rest are defaults, then;
$20,0000 income Infl Adjusted start 2015 (effectively cuts spending in half)
$20,0000 spending Infl Adjusted start 2021 (effectively returns spend to original)
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try similar, start at 5%, cut in half, return to 4%
FIRECalc: 5% - 2.5% - 4%
Start at 5%, cut to 2.5% in 2015, hold thru 2024 (ten years inclusive), then return to 4% of initial. Took 10 years to hit 100% success.
50K/1M defaults;
$25,0000 income Infl Adjusted start 2015 (effectively cuts spending in half to $25,000)
$15,0000 spending Infl Adjusted start 2024 (effectively returns spend to $40K - 4%)
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Using Investigate - for 100% straight, 3.59% spending through-out.
So let's SS this and see what the total spend (in buying power) would be summing all 30 years:
Code:
Straight 3.5947% : $1,078,410
Adjust 4% - 2% (6 years) - 4% : $1,080,000 100.15%
Adjust 5% - 2.5% (10 years) - 4% : $1,130,000 104.78%
To each their own, but I would not care to make a long term cut like that in my early years. And the long-term benefit is pretty small. Others might want to play with cuts at different points, and see what they get. I also did not attempt to find the low point in the portfolio in each case. I suspect that even with these drastic cuts, one would see a drastically reduced portfolio.
OK, here's one -
FIRECalc: 5% init, adj - 5 years - that takes the 5% initial and shortens to 5 years to give that ending portfolio value - it's down to less than half - $461,564/$1,000,000 - a 54% dip!
Oh, what the heck, for the others 4% - 2% -4% -
FIRECalc: 4% init, adjust - 5 years
$491,291/$1,000,000 - a 51% dip.
and straight 3.5947% -
FIRECalc: 3.5947% NO adjust - 5 years
$448,935 - a little worse actually, but all in the same scary neighborhood.
So when people say they would obviously cut their spending if their portfolio tanked, would they really cut it in half, for 6 years, in their prime retirement years?
Or something else? Please share any scenario that gets you to 100% - maybe it can be done with better times or more shallow cuts to spending. But then we may be getting close to data-mining - what would a generalized rule set be?
FireCalc already models this pretty closely with the "work Less, Live More" rule in the spending tab. You can adjust the % of subsequent year's spending with this tab. It's not exactly Guyton/Klinger but, it's probably close.
The problem I have with that is when the portfolio grows, you spend that much more, regardless of inflation. I think most people spend based on a combo of needs and resources, and don't just spend because they have it. They probably never would have attained FIRE status if they did that.
-ERD50