I have been retired for 11+ years (73 yo), and the variation on this method I use and really like to to take a monthly withdrawal of 0.5% of the current portfolio value. If you go back and look at the updated Trinity study, a non-inflation adjusted withdrawal of 6% is 30 year safe 93 to 98% of the time depending on AA.akushner23 wrote: ↑Tue Oct 16, 2018 7:53 pmI always feel like the strategy of picking your retirement start date and than tracking inflation seems complicated. What if you don’t have a hard “start date” but are working part time and also pulling from your portfolio? What if the week after you retire the market tanks? Do you base your 4% on the retirement date or the new reality of the lower portfolio?
How about instead of withdrawing an inflation adjusted 4% you instead withdraw 1% of your portfolio’s value, 4x a year? The 1% will be based on your actual portfolio value, not on the value the day you retired. Also you are guaranteed to not run out of money- if the portfolio drops your widthdrawl amount drops.
I don’t have as much knowledge as everyone here so perhaps there is something I’m missing.
Now a lot of people will say this is way too high, but the data says otherwise.
The other real, life-saving grace of this method is that while I started SS long ago, DW has not yet started (update -- she just started this month) and her SS will reduce the overall withdrawals to 5% annual or just under 0.42% per month. I always chuckle when I read of people setting aside a part of their portfolio to live on unit SS "kicks in". How many buckets and sub-accounts does a family need?
I keep track of this with an Excel spreadsheet, and most months there is a surplus of allowable withdrawal over actual, which i just allow to stay in the portfolio.
One of the real advantages of a non-adjusted constant percentage withdrawal is that there is no such thing as Sequence of Returns Risk with this strategy. Anyone who claims there is SORR with a constant percentage withdrawal has learned the buzzwords, but not the math.
Of course this is a volatile withdrawal plan, but in our case that volatility is tempered by SS and pensions. It is not for everyone, but in the right circumstances it can be very advantageous.