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Based on Kitces 20 years of SWR Research
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https://www.kitces.com/march-2012-issue-of-the-kitces-report-expanding-the-framework-of-safe-withdrawal-rates/
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Base Withdrawal Rate
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4.50%
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Highest "baseline" rate
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Controllable:
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Fees (Advisor+Expense ratio)/Alpha
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Fees net of expected
outperformance
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Tactical Asset Allocation
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Diversification
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Limitied
historical data makes this theorhetical
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Preference:
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Spending Flexibility
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Legacy/Longevity Hedge
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Facts:
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Tax drag on taxable investments
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Taxable investment
account only
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Time Horizon
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Valuation Environment
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Your "Safe"
Withdrawal Rate
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Appendix - Research
results for each decision
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Fees
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Reduce safe withdrawal
rate by 35% of the associated expense ratio and investment advisory fees.
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Alpha
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Increase safe withdrawal
rate by 35% of the expected outperformance.
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Do not include financial planning
"alpha"
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Tactical Asset Allocation
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Tactical Asset Allocation
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0.20%
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Buy & Hold
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0.00%
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Tax drag on taxable
investments
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Pre-tax
distributions outright cut the spendable portion of the withdrawal rate.
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Low-tax
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-0.25%
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Another way to think about is that SWR above is your pre-tax
withdrawal amount.
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Moderate-tax
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-0.50%
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High-tax
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-0.75%
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Legacy/Longevity Hedge
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Very important
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-0.20%
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Moderately important
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-0.10%
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Not important
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0.00%
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Time Horizon
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40 year time horizon
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-0.50%
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30 year time horizon
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0.00%
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Original research
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20 year time horizon
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1.00%
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Diversification
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Single Country Bias
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0.00%
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Globally Diversified Portfolio
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0.50%
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Spending Flexibility
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10% cut in bear markets
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1.00%
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Follow spending smile pattern
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0.50%
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Prefer no annual spending cuts
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0.00%
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Valuation Environment
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High Valuation
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0.00%
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Moderate Valuation
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0.50%
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Low Valuation
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1.00%
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Note - The calculator above has some variations from the
original article based on the creator's discretion. This spreadsheet is not
to be used as investment advice. You're responsible for your own
interpretation of the research. This is a tool for educational purposes only.
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