4% Question

I was thinking about the 4% rule after listening to a podcast that suggested that if you were flexible with your discretionary spending on down market years, you could potentially spend more than 4% most years. This got me wondering even a bit further. Has there been any research in annually re-evaluating your portfolio to determine your safe withdrawal rate?

For example, starting portfolio = $1 million and take a 4% - $40k withdrawal. By start of year two, the portfolio = $1,100,000 and you stay with 4% and take - $46,080. Year three is a down year and the starting portfolio = 900,000 and your 4% withdrawal = 36,000. And so on and so on...

Assuming that you could handle the volatility of your withdrawal rate, would this method work? I assume that someone way smarter than me has thought of this...but I haven't come across anything like it and was curious if it would work.

Thoughts?

Thanks!!