To get up to speed on using variable withdrawals in retirement, I’ve been studying “Variable Withdrawals in Retirement” from Bob’s Financial Website, among other resources. His article is the best overview I’ve seen so far.
The classic 4% withdrawal rate rule is about constant inflation-adjusted withdrawal amounts. The benefit of this approach is that it provides a smooth and predictable income stream for as long as wealth remains. But this method also has disadvantages. Wealth can run out. Also, it is probably not a realistic explanation for how people spend in retirement, since people probably don’t ignore market fluctuations. They may increase their spending when markets go up, and they are probably not going to play the implied game of chicken by continuing to spend the same amount each year as their wealth plummets toward zero.