Safe Withdrawal Rates: What Do We Really Know?
E. Kitces, Journal of Financial Planning)
Withdrawal Rule? Really? Is this the best advice the financial
expert community has to offer? Withdraw 4% (or some other
"safe" withdrawal percentage) of your accumulated savings in
your first year of retirement and then blindly increase that amount for
inflation for the rest of your life (or until you spend all your
savings, whichever comes first). You do this without adjustment
for actual investment experience, actual price inflation, changes in
heath or variations in amounts withdrawn. Am I the only
one who finds the 4% Withdrawal Rule crazy? If you want to
self-insure some or all of your retirement, you need to use an approach
(such as the one described in this website) that adjusts for actual experience.