The 4% Rule Just Became a Whole Lot Easier

I built a 4.36% real (inflation-adjusted) systematic withdrawal portfolio using a 30-Year TIPS ladder.

In June, I wrote about safe spend rates and concluded that a balanced portfolio could only support a 3.3% real withdrawal rate for a 30 year period with a 90% chance of success. There are differing opinions on what a safe spend rate should be. For instance, Mark Hulbert recently wrote in Barron’s that a 1.9% withdrawal is more appropriate.

At the suggestion of Bob Huebscher, the editor of this publication, I decided to try something different. I built a strategy backed by the U.S. government with Treasury Inflation Protected Securities (TIPS) that supports a reasonably level real 4.3% withdrawal rate for 30 years. It’s not perfect, but it was good enough for me to put my money behind it. I implemented such a portfolio with just under $100,000 of my own family’s nest egg.

First a little background and then I’ll get to the specifics of what I did and how you can do it too.


A couple of weeks ago, I wrote about six good things in this horrible market. One was that TIPS suddenly had attractive positive real yields rather than the negative rates for the past few years. Bob sent me an email stating that this could guarantee a 4% safe withdrawal rate. It took me a little time to digest, but I started playing with the math.

At the time, 30-year TIPS had a real 1.73% yield. I plugged it into a spreadsheet and got a 4.23% real safe withdrawal rate for 30 years before it was exhausted. Of course, this is theoretical as the volatility of 30-year TIPS is considerable so we can’t count on selling some every year at a fixed price. For example, the PIMCO 15+ Year US TIPS ETF LTPZ was down nearly 35% YTD as of October 19, 2022. And, of course, fees take from the return.