Several of the comments have pointed out the drawbacks of using static models (such as the SWR) to plan for retirement spending. The Guyton "guardrails" approach allows for variable spending depending on market returns but has been described as cumbersome to work with. Economist, Ben Mathew has introduced a free calculator (it does require you to register an account) that uses a dynamic strategy, Total Portfolio Asset Withdrawal. TPAW Planner With fairly basic data input it runs 500 Monte Carlo simulations using your chosen allocation profile to give a monthly spending amount from the first month of retirement until the end date of your choosing. It provides a median figure as well as 95% confidence limits depending on market variability. The utility of the methodology is that it provides a broad picture of possible consumption scenarios in retirement and allows you to make on-the-fly adjustments in savings rate, retirement date, extra spending, legacy goals, and a monthly spending ceiling (or floor). It is not as detailed as some financial planning software. For instance, it doesn't try to tackle the problem of where the withdrawals are coming from and the tax consequences. It doesn't track your particular portfolio, rather, it takes your asset allocation as a percentage of domestic stocks and bonds and reflects the performance of that mix. I have found the tool to be useful to get a general idea of expected retirement consumption, and based on the comments here, it may be a useful tool for some people to explore.
Comments
Several of the comments have pointed out the drawbacks of using static models (such as the SWR) to plan for retirement spending. The Guyton "guardrails" approach allows for variable spending depending on market returns but has been described as cumbersome to work with. Economist, Ben Mathew has introduced a free calculator (it does require you to register an account) that uses a dynamic strategy, Total Portfolio Asset Withdrawal. TPAW Planner With fairly basic data input it runs 500 Monte Carlo simulations using your chosen allocation profile to give a monthly spending amount from the first month of retirement until the end date of your choosing. It provides a median figure as well as 95% confidence limits depending on market variability. The utility of the methodology is that it provides a broad picture of possible consumption scenarios in retirement and allows you to make on-the-fly adjustments in savings rate, retirement date, extra spending, legacy goals, and a monthly spending ceiling (or floor). It is not as detailed as some financial planning software. For instance, it doesn't try to tackle the problem of where the withdrawals are coming from and the tax consequences. It doesn't track your particular portfolio, rather, it takes your asset allocation as a percentage of domestic stocks and bonds and reflects the performance of that mix. I have found the tool to be useful to get a general idea of expected retirement consumption, and based on the comments here, it may be a useful tool for some people to explore.
Post: Bengen’s updated 4% rule
Link to comment from May 23, 2025