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Variable Percentage Withdrawal (VPW)

Withdraw a percentage of your current portfolio each year, where the percentage increases as you age based on actuarial life expectancy.

How It Works​

VPW is a Bogleheads community method that calculates your withdrawal as a percentage of your current portfolio value, with the percentage increasing each year as your remaining life expectancy decreases.

The core idea: if you have 30 years left, you can afford to take a smaller percentage. If you have 10 years left, you should take a larger percentage. VPW uses an annuity-style PMT calculation to determine the right percentage for your age, asset allocation, and expected returns.

Unlike the 4% Rule, VPW never runs out of money — you're always taking a percentage of what's left. The trade-off is that your income fluctuates with the market: bad years mean smaller withdrawals, good years mean larger ones.

The Formula​

Each year:

percentage = PMT(expectedReturn, remainingYears, currentPortfolio) / currentPortfolio
withdrawal = currentPortfolio × percentage

Simplified:

withdrawal = currentPortfolio × VPW_table[age][allocation]

Key parameters:

  • Age: Drives remaining life expectancy
  • Asset allocation: Affects expected return assumption
  • VPW table: Pre-computed percentages by age and allocation (available on Bogleheads wiki)

Pros & Cons​

Advantages:

  • Mathematically cannot deplete the portfolio to zero
  • Automatically adjusts to portfolio performance
  • Spending increases naturally with age (when you may need more for healthcare)
  • Well-suited for long retirement horizons

Limitations:

  • Income is volatile — tracks market performance
  • Bad years mean real spending cuts
  • No guaranteed minimum income floor
  • Requires looking up or calculating age-based percentages annually

Example​

Starting portfolio: $1,000,000 | Asset allocation: 60/40 | Starting age: 65

AgePortfolioVPW %Withdrawal
65$1,000,0004.6%$46,000
70$1,100,0005.4%$59,400
75$950,0006.5%$61,750
80$800,0008.1%$64,800
85$600,00010.8%$64,800

Notice: even as the portfolio shrinks, the rising percentage can maintain or increase the dollar amount.

When to Use This Method​

VPW works best for retirees who:

  • Have a long retirement horizon (early retirees)
  • Can tolerate income fluctuations
  • Want a method that adapts automatically
  • Have other guaranteed income (Social Security, pension) to cover minimum expenses
Try It Yourself

Compare VPW against other strategies using your own numbers in the Scenario Builder.

References​