Subject: Re: Dividends

I think the notion of SWR of [real] 4% of starting portfolio market value advice is like advising people to subsist on unicorn meat. Does anybody still buy that stuff? But what do I know.
Sequence of returns risk per se doesn't really exist. It's really just "risk that you got bad advice and are withdrawing way too much". If you can't ride out a bad bear, you can't retire with the withdrawal rate you're contemplating, period. It's terrible to simply say to someone "you're not rich enough for that retirement income", but that's way better than saying "you're rich enough" when they clearly aren't.

I'll grant that starting with 4% of a decent estimate of the intrinsic value of the portfolio on retirement day would make some sense. It would be much more defensible. But just try to get someone to agree on the fair value. *

Personally I base retirement withdrawal ideas on a fixed fraction of portfolio liquidated each period, not a forever-fixed real dollar amount of withdrawals.
...


There is a group of people over at bogleheads that use a method like this for retirement withdrawals.
https://www.bogleheads.org/wik...

Variable percentage withdrawal (VPW) is a method which adapts portfolio withdrawal amounts to the retiree's retirement horizon, asset allocation, and portfolio returns during retirement. It combines the best ideas of the constant-dollar, constant-percentage, and 1/N withdrawal methods to allow the retiree to spend most of the portfolio using return-adjusted withdrawals. By adapting withdrawals to market returns, VPW will never prematurely deplete the portfolio.

The VPW method uses an increasing percentage to determine withdrawals from a portfolio during retirement. Each year, the withdrawal is determined by multiplying that year's percentage by the current portfolio balance at the time of withdrawal.

They also have a spreadsheet over at their web site.

Rich