In  a continuation to my piece on variable withdrawal decisions for financial independence, I discovered this video presentation by David Zolt, the financial planner who came up with the Target Percentage Adjustment (TPA). It gives us a better idea the extend of the performance of the TPA + 3.

As a quick recap, wealth de-accumulation have its own complexity versus wealth accumulation:

  • A fixed 4% safe withdrawal rate based on a 50/50 equity and bond portfolio with rising inflation may not work very well in other countries, but also in a low yield environment, where future bond portion will not yield as well
  • By not working well, we mean that you will outlive your portfolio, when your portfolio is subjected to major stock market downturn and sequence of return risk
  • TPA is a flexible way  of withdrawal in that, you do not increase withdrawal based on inflation when the …