Custom Variable Percentage Withdrawal (CVPW) #

The Custom VPW (CVPW) strategy was created by Siamond from the Bogleheads community forum.

Under the hood, the regular VPW strategy uses a hardcoded number to determine your annual withdrawal. This number is determined for you based on historical stock and bond performance.

The original creator of the VPW method strongly believes that there is not a great justification for modifying this value. Siamond disagrees, and thus, the Custom VPW method was created.

Other than this small difference, CVPW is identical in every way to VPW.

Strengths #

  • Adapts to market conditions, ensuring your portfolio never runs out of money prematurely
  • Ensures that you spend as much money as possible during your retirement

Weaknesses #

  • Withdrawal amounts can vary considerably based on market conditions
  • Following the algorithm toward the end of your estimated retirement may create problems. We can never know how long we will actually live.