Update: We posted the results from parts 1 through 8 as a Social Science Research Network (SSRN) working paper in pdf format:
Safe Withdrawal Rates: A Guide for Early Retirees (SSRN WP#2920322)
Welcome back to the Safe Withdrawal Rate Series. Last week we wrote about how Social Security can impact the SWR estimates. Even under the most optimistic assumption (no changes to the Social Security benefits formula), we didn’t think that the 4% withdrawal rate is safe.
But how about tinkering with the inflation adjustments, also called Cost-of-Living adjustments (COLA)? I often hear that one way to save the 4% rule in periods when the stock market doesn’t cooperate is to not do inflation adjustments for a few years. Or simply utilize the fact that we all potentially spend less (in real terms) as we age! How much can we push the initial withdrawal rate in that case?

Continue reading “The Ultimate Guide to Safe Withdrawal Rates – Part 5: Cost-of-Living Adjustments”