Variable percentage withdrawal

 (VPW) is a withdrawal method that adapts to the retiree's retirement horizon, asset allocation, and portfolio returns during retirement. It combines the best ideas of the constant-dollar, constant-percentage, and 1/N withdrawal methods to allow the retiree to spend most of his portfolio using return-adjusted withdrawals. By adapting withdrawals to market returns, VPW will never prematurely deplete the portfolio.

The VPW method uses a variable (increasing) percentage to determine withdrawals from a portfolio during retirement. Each year, the withdrawal is determined by multiplying that year's percentage by the current portfolio balance at the time of withdrawal.

The VPW method and retirement planning spreadsheet were collaboratively developed and improved by a group of Bogleheads members, some of which are also member of the Financial Wisdom Forum.

The spreadsheet allows backtesting on two data sets: Canada (1970-2015) and U.S. (1871-2015).

Download location
{{Notice|Download the latest VPW spreadsheet:

Dropbox

 * Click on: VPW Spreadsheet (version: February 15, 2016).

GoogleDocs
}}
 * Click on: VPW Spreadsheet (version: February 15, 2016).
 * Hover your mouse near the top of the page and click on the Arrow-Download-4-icon.png icon to download the file.
 * Ignore the "Whoops! There was a problem loading more pages." message.

The spreadsheet is developed using the free LibreOffice Calc software.
 * Users have reported that some charts do not display as nicely with Microsoft Excel.
 * Google Docs is unable to correctly display the file.

How to use variable-percentage withdrawals during retirement
VPW is best used in conjunction with guaranteed base income from Old Age Security (OAS), Canada Pension Plan (CPP) or Québec Pension Plan (QPP), pensions, and, if necessary, inflation-indexed Single Premium Immediate Annuity (SPIA).

Base income for years between retirement and the start of OAS/CPP/QPP payments can be provided by using a simple GIC ladder. For the purposes of VPW calculations, the money set aside in the GIC ladder should not be considered as part of the portfolio.

It has been suggested to delay OAS and CPP to age 70 to increase base income in and.

With the VPW Table

 * 1) The following procedure should be repeated each year of retirement:
 * 2) Lookup the withdrawal percentage for your age (or, for a couple, the age of the younger spouse) and the planned asset allocation of your portfolio for the upcoming year in the table below. (For example, a 65-years old retiree with a 30% Stocks / 70% Bonds portfolio would find 4.4% on line 65 under the appropriate column).
 * 3) *Note that the withdrawal percentage changes every year. It must be looked up, as your age has increased by one since the previous year.
 * 4) Multiply the current balance of your portfolio by the looked up percentage to calculate the withdrawal amount. (For example, if the portfolio Balance is $1,200,000 and the percentage is 4.4%, the withdrawal amount is $52,800).
 * 5) * Note that the withdrawal amount changes every year. It must be recalculated because both the portfolio balance and the withdrawal percentage have changed since the previous year.
 * 6) Withdraw the withdrawal amount and rebalance your portfolio.
 * 7) Every few years, you should review your overall retirement plan.
 * 8) Around age 80, if you're still alive, it is important to consider using part (but not all) of your remaining portfolio to buy an inflation-indexed life annuity, so that total non-portfolio income (including Old Age Security (OAS), Canada or Quebec Pension Plan (CPP or QPP), pension, and other lifelong income) is sufficient to live comfortably, independently of future portfolio withdrawals. This aims to reduce the financial risks associated with living past age 100.
 * 9) It is suggested to limit the withdrawal percentage to no more than 10%, after buying the inflation-indexed life annuity.

With the spreadsheet

 * 1) Open the spreadsheet with Microsoft Excel or LibreOffice Calc.
 * 2) Click on the Instructions tab and read its content.
 * 3) Click on the VPW tab and:
 * 4) Enter the Start Year and Start Age of your retirement. (For a couple, use the age of the younger spouse).
 * 5) Each year:
 * 6) Check that the asset allocation corresponds to the planned allocation of your portfolio for the upcoming year (Domestic Stocks, International Stocks, and Domestic Bonds). If necessary, adjust the values. (This happens, for example, when a retirement portfolio is on a glide path).
 * 7) At the beginning of the year, enter the Balance of your portfolio to compute the Suggested Withdrawal amount.
 * 8) Make the withdrawal and rebalance your portfolio (at the beginning of the year!).
 * 9) As soon as your withdrawal is made, record it in the Actual Withdrawal column.
 * 10) Every few years, you should review your overall retirement plan.
 * 11) Around age 80, if you're still alive, it is important to consider using part (but not all) of your remaining portfolio to buy an inflation-indexed life annuity, so that total non-portfolio income (including Old Age Security (OAS), Canada or Quebec Pension Plan (CPP or QPP), pension, and other lifelong income) is sufficient to live comfortably, independently of future portfolio withdrawals. This aims to reduce the financial risks associated with living past age 100.
 * 12) It is suggested to limit the withdrawal percentage to no more than 10%, after buying the inflation-indexed life annuity.

Support
On-going discussion and support is in.