Asset Allocation & Withdrawal Strategies in Retirement – Bolin
There is an interesting article by Charles Lynn Bolin (
@lynnbolin2021 ) on withdrawals in the January 2024 MFO issue. In the SUPPLEMENTARY information presented here, portfolio # won’t be used as they can cause confusion.
In Bolin’s Table #1 with 4 portfolios tested with 6% withdrawal rates, be aware that those are 6% withdrawals from the YEAREND balances every year. So, the amounts withdrawn will fluctuate widely with the market. The residual balances are shown in Figure #1 to indicate whether those kept up with inflation.
Interestingly, PV has a parameter PWR (under the Metrics tab) that provides max % withdrawals from YEAREND balances that will also leave inflation-adjusted residual at the end.
A reference is made to “the time-tested 4%”, but that so-called Bengen’s Rule has a different withdrawal regime – 4% of the INITIAL lump-sum that is subsequently adjusted annually for inflation; the PV run settings also allow for this and the related PV metric SWR is the max % withdrawal in this scenario (that will EXHAUST the portfolio).
One can also deduce from the PV run data the max % of the INITIAL lump-sum that is subsequently adjusted annually for inflation AND leaves inflation-adjusted initial lump-sum at the end, and that % is SWRM.
The table below shows PWRs, SWRs, SWRMs.
Portfolio; PWR; SWR; SWRM
50%VFINX + 50%VTRIX; 5.59%; 7.71%; 6.79%
70%VFINX + 25%VBMFX; 5.92%; 7.77%; 6.96%
50%VFINX + 25%VTRIX + 25%VBMFX; 5.40%; 7.46%; 6.50%
VFINX; 7.06%; 8.77%; 8.19%
Bolin’s conclusions about inflation adjusted residual balances are consistent with whether the PWR is less than, or greater than, 6% in the table above. It is also interesting that all could support Bengen-style 4% (w/COLA) and even higher (note SWRs). In fact, all would leave more than inflation-adjusted initial lump-sum even with 6% w/COLA (note SWRMs).
Of course, all the data and conclusions are for the period 01/1987-12/2023.
https://www.mutualfundobserver.com/2024/01/asset-allocation-and-withdrawal-strategies-in-retirement/ 
