Variable percentage withdrawal: the spending rule that refuses to run out of money

By Tom, CPA · Updated October 25, 2026

TL;DR: Variable percentage withdrawal (VPW) is a Bogleheads method: each year you withdraw a percentage of your current portfolio, based on your age and stock/bond mix. The percentage rises as you age. Because it always spends a fraction of what's left, it can't run the portfolio to zero early, but your income goes up and down with the markets. It works best with a stable income floor such as Social Security.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

The 4% rule asks one question: what fixed, inflation-adjusted amount could I have withdrawn that survived the worst historical periods? It then ignores the market completely. Your portfolio could triple, and the rule would keep paying you like you're one bad decade from ruin. It could also halve, and the rule would keep paying as if nothing happened.

Variable percentage withdrawal takes the opposite view: spend a sensible fraction of whatever you actually have, each year. Lavish Larry likes the sound of spending more in good years. He has not yet thought about bad years. This guide covers the method, the table, and the trade-offs. It builds on safe withdrawal rate research and assumes a low-cost portfolio as described in index fund investing.

CPA Warning Label: VPW does not guarantee a stable income. Withdrawals can fall significantly after market declines. Table percentages assume certain return expectations and are not a promise. Plan for a spending floor that you can live on in bad years.

Method

According to the Bogleheads wiki, VPW "uses an increasing percentage to determine withdrawals from a portfolio during retirement. Each year, the withdrawal is determined by multiplying that year's percentage by the current portfolio balance." The method was developed collaboratively by forum members, and the wiki provides a free worksheet and a backtesting spreadsheet.

Each year:

1. Look up the percentage for your age (for a couple, the younger spouse's age) and your stock/bond allocation.
2. Multiply your current portfolio balance by that percentage. That's this year's withdrawal.
3. Withdraw it, rebalance, and repeat next year with your new age and balance.

The percentages are built so the portfolio is spent down over a horizon ending at age 100. The wiki suggests limiting the percentage to no more than 10%. It also suggests considering a single-premium immediate annuity for part (not all) of the portfolio around age 80 to protect against living past 100. VPW is designed to sit on top of guaranteed income, such as Social Security or a pension.

A key detail for early retirees: if you retire before Social Security starts, the table version suggests setting aside the "missing" Social Security payments in a savings account or CD ladder that's kept outside the VPW portfolio. The spreadsheet handles this automatically.

Why does the percentage rise with age? Because the remaining horizon shrinks. At 40 the method assumes you need to fund 60 more years, so it withdraws cautiously. At 80 there are 20 years left, so a larger share can safely go out each year. Mathematically, it works like an amortizing loan payment calculated in reverse: the payment that would spend the balance to zero over the remaining years at an assumed return. Because the balance is updated each year, the payment automatically recalculates after good and bad markets. There's no need to predict returns perfectly. Errors in the assumption show up as gradual changes in your income rather than as a sudden empty account.

Table

Selected rows from the Bogleheads VPW table (accessed Oct 2026):

Two patterns stand out. First, the percentages at age 40 are below 4%, which is VPW's way of saying a 60-year horizon is long. Second, more stocks means a higher percentage, because the table assumes higher expected returns for stocks. That assumption is reasonable, but it also means a larger stock share brings bigger swings in the dollar amount you actually get. Always check the current table on the wiki rather than copying it from any one article, including this one.

Pros and cons

Pros:

• No early depletion by design. Spending a percentage of the balance means the portfolio can't hit zero before the end of the planned horizon.
• Spends the money. Fixed-dollar rules often leave retirees dying with huge balances. VPW raises spending when markets cooperate.
• Simple. One lookup and one multiplication a year.
• Self-correcting. After big gains you spend more, and after losses you spend less.

Cons:

• Volatile income. A 30% market drop means roughly a 30% cut in the withdrawal. Your mortgage won't drop 30%.
• Requires a floor. Without Social Security, a pension or very flexible spending, the swings can be painful.
• Front-loaded vs back-loaded debates. Some argue VPW spends too little early and too much late; others the reverse, depending on assumptions.
• Behavioral friction. Cutting spending is easy in a spreadsheet and hard in real life.
• Taxes not included. The withdrawal is a gross amount. Withdrawals from traditional accounts are taxable, so budget the after-tax figure.

A common fix is to split spending into needs and wants. Cover needs with a floor (Social Security, a T-bill or TIPS reserve), and pay for wants with the VPW amount.

Comparison to the 4% rule

The 4% rule comes from Bengen's research, which used a historical worst case for a 30-year horizon. For 50 or 60-year early retirements, many researchers suggest something lower, which happens to be close to VPW's starting percentages at age 40. Guardrails sit between the two approaches: steady income with occasional adjustments. Fees matter for every method, because each 1% in costs comes straight out of what's available to spend. See why expense ratios matter.

Example

Illustration: Frugal Fran retires at 45 with $1,200,000 in a 60/40 portfolio. Her VPW percentage at 45 is 4.2%, so year one's withdrawal is 1,200,000 × 4.2% = $50,400.

That leaves $1,149,600. Suppose the portfolio then drops 15%, to $977,160. At 46, the table percentage is still 4.2%, so year two's withdrawal is 977,160 × 4.2% ≈ $41,041, an 18.6% pay cut.

Under the 4% rule, she would have taken $48,000 in year one and about $49,440 in year two (with an assumed 3% inflation adjustment), regardless of the drop. That's more comfortable for now, but it draws a larger share from a shrunken portfolio, which is the setup for sequence risk.

Now the good path: if her portfolio instead rose 15%, year two's withdrawal would be 1,149,600 × 1.15 × 4.2% ≈ $55,526, while the 4% rule would still pay $49,440. Fran's plan: a $35,000 floor of needs covered every year, using a cash reserve until Social Security starts. Everything above that is fun money that rises and falls. She also keeps the plan honest by rebalancing once a year, right after the withdrawal, so the 60/40 column stays accurate. Lavish Larry, after reading this, asked if he could use the 70/30 column and take the good years only. No.

Try your numbers in the withdrawal rate calculator or guardrails calculator.