Variable percentage withdrawal: Difference between revisions

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{{Spreadsheet sidebar}}
{{Spreadsheet sidebar}}


'''{{PAGENAME}} (VPW)''' is a withdrawal method that adapts to the retiree's ''retirement horizon'', ''asset allocation'', and ''portfolio returns'' during retirement. It combines the best ideas of Constant-Dollar, Constant-Percentage, and 1/N [[Withdrawal Methods]] to deliver a method that will allow the retiree to spend his portfolio using ''returns-adjusted'' withdrawals without risking to prematurely deplete it (success rate: 100%).
'''{{PAGENAME}} (VPW)''' is a withdrawal method that adapts 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 his portfolio using ''return-adjusted'' withdrawals. By adapting withdrawals to market returns, VPW will never prematurely deplete the portfolio.


The '''VPW spreadsheet''' uses a variable (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.
The '''VPW spreadsheet''' uses a variable (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.

Revision as of 00:37, 3 November 2014

Variable percentage withdrawal (VPW) is a withdrawal method that adapts 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 his portfolio using return-adjusted withdrawals. By adapting withdrawals to market returns, VPW will never prematurely deplete the portfolio.

The VPW spreadsheet uses a variable (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.

The Variable percentage withdrawal method and spreadsheet were collaboratively developed and improved by a group of Bogleheads[1].

The spreadsheet allows backtesting on two data sets: U.S. (1871-2013) and Canada (1970-2013).

Download location

The spreadsheet is developed using the free LibreOffice Calc software.

  • Users have reported that some charts do not display as nicely with Microsoft Excel.
  • Google Docs is unable to correctly display the file.

Screenshots

Screenshot VPW.jpg

Support

On-going discussion and support is in this forum thread: Variable Percentage Withdrawal

See also

References

  1. VPW was developped in the forum thread: Variable Percentage Withdrawal.