I’ve posted Entry #143 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Using a Variable Withdrawal Rate Is No Advance Over Using a Fixed One.
Juicy Excerpt: Say that instead of taking out a fixed 4 percent, you take out a variable 4 percent, insuring that your withdrawal will be less in times of poor returns than at times of good returns. In this scenario, you will be taking out only $20,000 in Year 11. Since you are taking out only half of the money that you would be taking out under the fixed-withdrawal approach, the odds of the retirement surviving are obviously far better. That’s the appeal of the variable-withdrawal approach. It makes the numbers look better. People who think this solves the problem are kidding themselves, in my assessment.