Retirement calculator with alternate withdrawal methods?

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ceperry
Posts: 15
Joined: Tue Jul 12, 2016 8:45 am

Retirement calculator with alternate withdrawal methods?

Post by ceperry » Thu Jan 10, 2019 11:18 pm

I’m reading Wade Pfau’s book “How Much Can I Spend in Retirement?: A Guide to Investment-Based Retirement Income Strategies” and in it he discusses a variable withdrawal method that I had never encountered before. He calls it an “endowment formula” that bases 50% of it’s withdrawal on a canstant base withdrawal (indexed for inflation) and the other half based on a percent of the overall portfolio that remains.

In the book, Pfau presents a graph of spending pattens that looks promising. Annual withdrawals vary over the years, but the hybrid approach really seems to dampen the volitility in withdrawals. Unfortunately, the assumptions he used don’t match my own circumstances very well, so I would like to explore the method more using my own inputs.

Does anyone know of an online retirement calculator that has an option to specify portfolio withdrawals using a hybrid method similar to what Pfau described? I know about tools like FIREcalc, cFIREsim, and Portfolio Visualizer, but I don’t think any of these tools will permit this type of hybrid withdrawal scheme. (But please correct me if I’m wrong!)

Thanks.

dcabler
Posts: 1028
Joined: Wed Feb 19, 2014 11:30 am

Re: Retirement calculator with alternate withdrawal methods?

Post by dcabler » Fri Jan 11, 2019 7:07 am

ceperry wrote:
Thu Jan 10, 2019 11:18 pm
I’m reading Wade Pfau’s book “How Much Can I Spend in Retirement?: A Guide to Investment-Based Retirement Income Strategies” and in it he discusses a variable withdrawal method that I had never encountered before. He calls it an “endowment formula” that bases 50% of it’s withdrawal on a canstant base withdrawal (indexed for inflation) and the other half based on a percent of the overall portfolio that remains.

In the book, Pfau presents a graph of spending pattens that looks promising. Annual withdrawals vary over the years, but the hybrid approach really seems to dampen the volitility in withdrawals. Unfortunately, the assumptions he used don’t match my own circumstances very well, so I would like to explore the method more using my own inputs.

Does anyone know of an online retirement calculator that has an option to specify portfolio withdrawals using a hybrid method similar to what Pfau described? I know about tools like FIREcalc, cFIREsim, and Portfolio Visualizer, but I don’t think any of these tools will permit this type of hybrid withdrawal scheme. (But please correct me if I’m wrong!)

Thanks.
The number of withdrawal methods is only limited by the imagination of the people creating them. Long ago, I made the decision to just create my own spreadsheets to compare and contrast the various types I've run across. It forces me to understand the math behind them, let's me backtest different starting years, and is totally under my control.

While not what you're looking for, a similar hybrid method if Hebeler's "autopilot". Depending on which website you visit, the percentages between the two sub-methods vary. But in the link below, it's 50% constant base withdrawal (indexed for inflation) and 50% RMD. As mentioned before, the possibilities are endless, as the the possibilities to create hybrid versions.


https://www.marketwatch.com/story/put-r ... 2013-07-24

dbr
Posts: 29798
Joined: Sun Mar 04, 2007 9:50 am

Re: Retirement calculator with alternate withdrawal methods?

Post by dbr » Fri Jan 11, 2019 10:01 am

Don't forget that all withdrawal models generate results that are subject to a range of error or offer advantages that are contingent on certain actual histories of investment returns. Trying to demonstrate that any particular strategy is a really good idea compared to another one is very difficult.

I think withdrawal strategies are generally poor matches for real world withdrawal needs.

I am a great enthusiast for looking at withdrawal models to understand how things can work and to estimate roughly how much trouble one is in, but I don't think models are actually practical tools for living out a retirement.

Jimmie
Posts: 385
Joined: Tue Mar 07, 2017 7:05 pm

Re: Retirement calculator with alternate withdrawal methods?

Post by Jimmie » Fri Jan 11, 2019 3:51 pm

dbr wrote:
Fri Jan 11, 2019 10:01 am
I think withdrawal strategies are generally poor matches for real world withdrawal needs.
Good point.

I'm currently investigating some scenarios that include an early retirement option for either my GF or me (or both). Considering our combined assets offer us comfort no matter what, we have a common understanding that in retirement, our expenditures, and consequently our withdrawal rates, may vary wildly. Even though our basic living expenses will be pretty consistent, we plan on traveling some years more than others. We plan to gift our family some years more than others, all depending on what it takes to suitably spoil the grandchildren. And we expect more grandchildren down the road.

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