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The basics
Variable percentage withdrawal (VPW) uses the previous year’s closing portfolio balance and the number of years left in the plan. A published schedule turns that remaining horizon into a withdrawal percentage.
The percentage rises as the planning horizon gets shorter. Because the balance is checked again each year, market losses and recoveries also change the next year’s budget.
Illustrative numbers
One household, five points on the schedule
Cards’ bill before scaling$70,000
Free cash the year brings$20,000
35 years left · $1,000,0005% → scale 1.00
34 years left · $700,0005% → scale 0.79
27 years left · $900,0006% → scale 1.06
10 years left · $400,00012% → scale 0.97
1 year left · $150,000100% → clamped to 1.50
The first retired year happens to land on the plan as written: 5% of a million dollars plus the year’s $20,000 of free cash is exactly the $70,000 the cards ask, so the scale is 1.00. The crash year budgets $55,000 instead — the same share of a smaller balance — and the recovery year, now reading the 27-year row’s 6%, budgets $74,000. With ten years left the share has risen to 12%, which on a $400,000 balance still funds $68,000 of the $70,000 bill. In the final year the schedule’s 100% row would ask for $170,000 of spending against a $70,000 plan; the ceiling clamp stops it at 150%, or $105,000.
Calculation transparency
How it works in MoneyWhatIf
- 01
The rule runs only in retired years, only inside the window the strategy names, and only on a funded projection. A working year passes through at a scale of one, and a retired year whose chosen cards ask for nothing at all is skipped rather than read as a verdict on the portfolio.
- 02
The portfolio is what the accounts closed the prior year holding — the same statement a required minimum distribution is worked out from — with each balance floored at zero before they are added together.
- 03
Years left is the plan’s own horizon: the last plan year less this one. It is not a life expectancy the rule computes and not an age row the model looks up, so extending or shortening the plan’s final year moves every share after it.
- 04
The share is read off the Bogleheads’ schedule for a half-stocks portfolio, walked from the far horizon inward. Each row’s share holds from its own horizon down to just above the next shorter row, so a horizon that falls between rows takes the longer row’s share — thirty-five years left reads the forty-year row’s 5%, not the twenty-seven-year row’s 6%.
- 05
Free cash is the year’s other money: every income stream the year pays — salary, Social Security, a pension, an annuity — and rent in; payroll and income taxes, the pre-tax and after-tax contributions and a job’s own pension deferral, the mortgage, property tax, upkeep and the debt payments out, along with any spending card the rule was not given to bend.
On a plan whose tax settles the following April, the income tax out is only the share the paycheck withheld, and last April’s settlement is netted with it — out when the year owed, back in when it was a refund.
The rule therefore sizes the portfolio’s share of the bill rather than the whole bill — income is spent first, the schedule’s budget on top.
- 06
The scale is that budget plus the free cash, divided by what the chosen cards ask before any scaling, then clamped between the floor and the ceiling — 60% and 150% of the plan’s own spending by default. A drained portfolio budgets nothing, and the floor is what keeps the lights on.
- 07
The scale multiplies the chosen cards’ amounts before they are posted, so tax, the cash buffer, the withdrawal order and Medicare’s surcharge two years later all follow the trimmed or raised bill. The rule carries no memory between years: every year is read fresh from the balance and the horizon.
Keep in mind
Model limits
Years left is the plan’s modeled horizon rather than a life expectancy, so the schedule is read against the last year the plan happens to run to; moving that year moves every share after it, which is a real difference from the published rule’s own age-based table.
The schedule quoted is the Bogleheads’ own for a half-stocks portfolio, and the model does not re-read it against the mix the accounts are actually holding or carry the wider guidance the published method is normally used alongside.
The final 100% row is the schedule being arithmetically honest about a one-year horizon rather than advice anybody takes; the ceiling clamp is what actually answers it, and a household reaching that point should read the ceiling, not the row.
The annual model makes one reading a year from the prior year’s closing balances, and cannot represent a mid-year adjustment, month-by-month withdrawals, or a household that simply declines the cut. This is educational planning output rather than individualized withdrawal advice.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
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Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.