WSJ: Say Goodbye to the 4% Rule

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There are plenty of articles about shortcomings of the 4% rule - which  
is still a great *starting point* if not a real plan. The WSJ brings up  
a few alternatives to help overcome the problems with the 4% rule:

Some of the adjustments/alternatives discussed:

(1) using annuities (SPIAs) instead of bonds
(2) tie withdrawals to the life expectancy tables rather than a the  
traditional 4% rule's inflation-adjusted 4% (of whatever your starting  
balance was) - using last year's end-of-year balance every year.
(3) Kitces' rule pegging withdrawals to market valuations  
(specifically, the PE10 of the S&P500)

Some really good food for thought here.  It seems most discussion of  
investing and portfolio construction is geared towards accumulation  
phase, not distribution phase.  The 4% rule caught on in a huge way  
because it was simple, understandable, and based on history, generally  
helpful.  The well known shortcomings - failure when there are early  
periods of poor returns, and having withdrawals entirely untied from  
performance of portfolios or valuation - are things that nobody's truly  
come up with a perfect solution for.  It's nice to see some discussion  
of this in the popular press.

In a similar vein, I've seen lots of articles about the "bucket method"  
but very few about the actual mechanics of *living* with the buckets -  
they describe how to set the buckets up in year one, but what do you do  
the next year and the year after - how do the buckets "evolve" and how  
do you modify it over the course of different potental performance? --  
living off a portfolio is just not that simple, and if it doesn't work  
out, it's not the same as deciding to work a few extra years, since it  
won't be clear that it's not worked out until years after you've  
stopped working.

David S. Meyers, CFP(R)                                                   
disclaimer: for educational purposes only. This is not financial  

Re: WSJ: Say Goodbye to the 4% Rule
Fine tuning the withdrawal rate is nearly impossible (I think) to where the
resources are just enough to get one to end of life.

The only way to do it is to be very conservative, in which case, unless things
go very wrong, there will be a huge pot of money left behind.   In other words,
bank interest or interest from treasuries itself should be so much that it pays
for all expenses (including taxes on the interest) and continues to add to the
principal forever, growing the principal beyond the average interest rate.  

Even so, things like medical bills can bankrupt fairly well-healed folks.

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