Launch Calculator

Variable Percentage Withdrawal

(VPW)

The Variable Percentage Withdrawal (VPW) strategy was designed by the Bogleheads community. It's an effort to fuse the three "Basic Strategies" into one strategy that captures the best parts of those strategies, while minimizing the bad parts.

FI Calc's standard VPW follows the annual portfolio-only withdrawal formula in the Bogleheads VPW Retirement Worksheet v2.9. Each year, it multiplies your current portfolio balance by a withdrawal percentage calculated from your age and stock/bond allocation.

Age and Duration

Age in Timeline is your age at the start of the simulation. It increases by one in each simulated year. For a couple, the Bogleheads instructions use the age of the younger spouse.

The calculation plans to age 100, using expected real returns of 5% for stocks and 1.9% for bonds, weighted by their allocation. These are planning assumptions; FI Calc uses historical market returns to simulate portfolio performance. The annual withdrawal percentage is capped at 10%, including at ages 100 and older.

Duration controls how many years FI Calc simulates. It does not change standard VPW's planning horizon. VPW does not aim to empty your portfolio in the final simulated year.

Matching the Worksheet

To compare annual portfolio-only withdrawals, use the same age, portfolio balance, and stock/bond allocation in FI Calc and the worksheet:

  • Use a stock/bond portfolio with no cash allocation.
  • Turn off both minimum and maximum withdrawal limits.
  • Remove Additional Income and Additional Withdrawals.

The worksheet accepts ages 18–120 and stock allocations from 30% to 90% in 10-percentage-point steps, with the rest in bonds. FI Calc supports additional ages and allocations as extensions of the formula.

FI Calc calculates the percentage from the actual stock/bond balances at the start of each simulated year. The worksheet uses the allocation you select. For comparisons over multiple years, keep the target allocation fixed and rebalance annually; portfolio rounding can still cause small allocation differences.

Cash allocations, withdrawal limits, and additional cash flows are FI Calc extensions. Additional Income helps fund FI Calc's calculated spending amount, reducing the amount drawn from the portfolio. This differs from the worksheet's pension calculations. Pension bridges, adjustments for pensions without full inflation indexing, and the worksheet's required flexibility projection are outside FI Calc's portfolio-only calculation.

Strengths

  • Adapts withdrawals to your current portfolio balance and age
  • Limits the standard annual withdrawal percentage to 10% before any FI Calc withdrawal limits or additional cash flows are applied

Weaknesses

  • Withdrawal amounts can vary considerably based on market conditions
  • Portfolio-based withdrawals can become too low to cover your expenses after poor market performance
  • Adding a minimum withdrawal can exhaust the portfolio and changes the worksheet calculation

Fixed Worksheet Assumptions

VPW always uses the worksheet's stock and bond growth trends, age-based horizon, and zero future value. There is no expected-return override or custom PMT mode. Minimum and maximum withdrawal limits remain optional FI Calc overrides applied after the worksheet calculation.