Your withdrawal rate, in more detail

The four per cent rule rests on two studies of American markets in the last century. William Bengen found the share a retiree could take from a pot in the first year, raise with inflation, and still have it last thirty years from every start on record. The Trinity study, by Cooley, Hubbard and Walz of Trinity University, repeated the test and reported how often each rate survived.

Three things limit it:

• It is one country’s history. American returns in that century were unusually good, and on other developed markets the rule failed more often than it held.
• It is one horizon, and a longer retirement needs a lower rate.
• It is history. Today’s yields, prices and inflation need not repeat it, so some researchers re-estimate it each year.

The harm is done early: poor years at the start, with withdrawals coming out of a shrunken pot, are what it never recovers from. A younger retiree has more of those years ahead, and more ways to put a mistake right: spending less, working a little. A lower rate at the start leaves room to adjust once they are known. Someone in later life has fewer years to fund, and less need of it.

Landfall applies no rule. It projects your figures year by year, the stress test replays them through markets that vary, and logging each year replaces the guess with what happened. The rate summarises that projection and is not an input.