But still, we'll continue to reference that hoary old research. Why? Because the guys that did that hoary old research had fancy letters before or after their names, and wrote their stuff in a serif font on two-columned dead-tree paper (now PDFs) rather than on the wild-and-crazy World Wide Web. It's just dumb how a forum like this is filled with people every bit as smart or even smarter than those guys, who have done as much or more work and research and insight-creation, and we fail to recognize that.
Pfau has a new research paper out surveying the literature on variable withdrawal strategies, as summarized and linked to in his latest post on his blog.
The "literature" surveyed in his academic article includes the bogleheads forum thread on the "variable percentage withdrawal" strategy. Pfau often gives due acknowledgement to the good work being done in the early retirement blogosphere, but seeing a citation to a bogleheads forum thread thrown in among the litany of italicized bluebook citations to various Journals of Hoary Academic Research on Financial Planning in the article's endnotes reminded me of this thread and made me smile.
Thanks for the link! Just downloaded the paper, will dive into it later.
Okay, that was neat, but tough to sum up.
I think my favorite way to approach it is decide what you want your floor to be in real spending at the 10th percentile, and look at that column.
I.e. starting w/ 1MM, you can withdraw 28.8k - 2.88% SWR - on the typical 4% SWR rule of inflation adjusted, and that's your constant spending. If you're willing to have a low of 10k real, Zolt may be acceptable, etc.
For me, I think my floor is 15k annual, or 1500 on this chart that uses 1/10th of those numbers, at the 10% level. Under that, the RMD strategy is the highest initial WR that hits that, at only 3.23%
Scary. I'd have thought variable WRs would have added a half percent or percent to one's WR.
The climate is so tough, I suppose.
We always say though "well 4% flat may not work, but if you adjust your spending you should be fine" -- here it shows you'd need a 2.88% SWR, and even if you're willing to adjust spending you'll probably need to be sub-4%, unless you're okay with the spending going REALLY low (i.e. under 1% of the initial stache, or less than 1/4th of your initial spend level).
Bengen's Floor and Ceiling, at 3.33% WR, actually look the most appealing to me. But yikes if you're in the bottom 10% and your real wealth is cut from 1MM to 5k after 30 years. GG. Those of us with significantly longer timelines than 30 years (perhaps even double that) may need a lower WR than we've been thinking. The "be flexible" we mention may not be quite enough, it may be "start with a lower WR
and be flexible"
Of course, I'll probably have a more aggressive AA than 50/50 also.