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.

As a Maximize Spending strategy, VPW will never prematurely deplete your portfolio, but by design it brings your portfolio to $0 in the final year of your retirement.

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.