tman9999 wrote: ↑Tue Oct 26, 2021 12:35 pmBased on all of this discussion I was hoping that the wikipedia page for ABW would be updated to include a summary of both the pros and the cons of the ABW method described there.
I'm currently planning on following McClung's approach, but this thread got my attention. So now feeling rather stuck - we only get one shot at this, and I'm planning on starting in the next year or so.
As you undoubtedly noticed by browsing those 15 pages, we had a hard time to come to a consensus with the wording of the wiki page and I suspect there is little appetite for doing another round of word smithing... At least, as one of the lead contributors, I don't have any.
Pros and cons are tricky, because it's really an "it's in the eye of the beholder" thing. Case in point:
- I genuinely believe ABW is one of the best approaches for people with a Do-It-Yourself mentality and having fairly solid spreadsheet skills.
- but the counterpart is that it might not be that great for people with limited spreadsheet skills and/or people who seek a fully shrink-wrapped approach (VPW might then be a better choice; although a simple 5% of one's
current portfolio would be a better choice for some).
- ABW is a
variable withdrawal method, which is only good if one has a financial situation allowing year-to-year flexibility in one's spending (i.e. room for discretionary expenses; AND a corresponding mindset of flexible spending).
- But the counterpart is that if you don't have such mindset and/or flexible financial situation, then other approaches (e.g. the more slowly moving Guyton-Klinger decision rules; or the more extreme approach of annuitizing [all or some of] one's portfolio with an SPIA) might be for you.
- Some people with more wealth might not care whatsoever about such withdrawal formulas and be happier winging it.
- Some very frugal (and a tad paranoid) people might be happier just navigating way under past safe withdrawal rates.
- Etc.
What I am trying to say is that there is no one-size-fits-all. It all depends on your personal circumstances and behavior.