# Withdrawal Schemes

#### wabmester

##### Thinks s/he gets paid by the post
Dory, I know you're retired, but have you looked at this poll on withdrawal strategies used by ERs?

Interested in modeling any of these?

The big one seems to be capping expenses by roughly 4% of current nest egg.

You sort of do this as part of the 95% rule, but it's coupled to some funky "success" test that can't be uncoupled as far as I can tell.

BTW, I heard a great description of using 4% of current nest egg until you hit a bad stretch and then switching to inflation-adjusted withdrawals: "hunting for the failure sequence."

Also, what exactly do you do with the inflation rate/data? Is it only used to adjust the annual withdrawal or does it have some other impact?

One of these days I will probably do some additional strategies, and would include any that made sense that could be condensed down to objective rules that can be implemented. ("Buy stocks that go up. If they don't go up, then don't buy them" is my favorite.)

The inflation is primarily used to calculate the withdrawal amount. For reporting, there are a few places where everything is adjusted to show the results in uninflated dollars.

dory36 said:
The inflation is primarily used to calculate the withdrawal amount. For reporting, there are a few places where everything is adjusted to show the results in uninflated dollars.

Thought so. So, if somebody wanted to model the effect of giving themselves a 6% raise each year, you would also use that rate to show results in terms of "uninflated dollars."

You might consider uncoupling those two, so one could play around with withdrawal raises but still use CPI for resulting buying power.

You already know what i'm going to say...

Cute Fuzzy Bunny said:
You already know what i'm going to say...

That you entered your personal rate of inflation into FIREcalc, and it told you to keep working?

Whats a "personal rate of inflation"?

Ahem - the Norwegian widow would like to put in a vote for current yield of a given stock/bond portfolio.

Not necessarilly - psst Wellesley but? something nice.

heh heh heh