Withdrawing a Percentage of the Current Balance

Research on Safe Withdrawal Rates

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Withdrawing a Percentage of the Current Balance

Post by JWR1945 » Sun Dec 14, 2003 2:06 pm

Withdrawing a Percentage of the Current Balance

The Retire Early Safe Withdrawal (Rate) Calculator, Version 1.61, 7 November 2002, along with all of my modified versions can show the results of withdrawing a constant percentage of a retirement portfolio's current balance.

You simply set the initial withdrawal rate (in cell B9) to zero and combine your withdrawal rate and expenses together (in cell B15). For example, if you want to look at withdrawing 5.00% of your current balance each year and if you assume that your portfolio expenses are 0.20%, simply type 5.20% (or 5.2%) into cell B15 as your investment expenses (and zero into cell B9). In fact, you can combine inflation adjusted withdrawal amounts based upon your initial balance and a withdrawal based upon a percentage of the current balance.

In both cases withdrawal amounts are split into a withdrawal at the beginning of the year followed by another withdrawal at the very end of the year (in accordance with cell B10). Withdrawals with an inflation adjustment have the same adjustment applied both at the beginning and the end of the year. Withdrawals based upon the percentage of the current balance are different. They include the effects of any portfolio growth (or decline) that takes place during the year.

Have fun.

John R.

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