To use the favorite phrase of perhaps the most famous actuary of the 20th Century, Robert J. Myers, I am constrained to disagree. I outline the shortcomings of the 4% Constant Withdrawal Approach in my February, 2014 article (published in Volume 13 Issue 2 of the Journal of Personal Finance, p. 51). In summary, the method:
- Doesn't coordinate well with other sources of retirement income,
- Doesn't smooth results from year to year,
- Doesn't attempt to provide constant real dollar income from year to year, and
- Produces far too low withdrawals in later years of retirement, resulting in under spending and larger than intended amounts left to heirs at death.