The classic 4% rule is a 30-year heuristic. Judging every plan against a flat 4% line misreads shorter horizons. A 72-year-old drawing 4.6% is not failing, so the KPI compares your initial draw rate against a ceiling that depends on your remaining horizon.
The bands
The green ceiling comes from historical worst-case survivable initial rates for a US 60/40 portfolio, interpolated by remaining years: about 8% at 10 years, 5% at 20, the canonical 4% at 30, 3.6% at 40. Amber runs from the ceiling to one percentage point above it; red is beyond that.
Because the whole plan runs in today's dollars, the rate is inflation-consistent by construction. No "adjust for inflation each year" footnote needed.
Three places to read it
- The KPI grades your plan's initial rate against the ceiling for your horizon.
- The Expenses tab's Withdrawal rate by age chart plots the running rate as a curve, against the ceiling re-computed for the years remaining at each age, so the ceiling line rises as the horizon shortens, and a widening gap between the two is the plan working rather than drifting. The same per-year rate appears in the spending chart's hover read-out.
- The year-by-year table's Withdrawal % column shows the same running draw rate along the median path: every dollar the portfolio actually paid out that year over start-of-year value. That is the spending draws plus the RMD, less the excess RMD that went straight back into taxable because money that never left isn't a withdrawal. It also includes both kinds of HSA draw and the dollars that funded the year's tax bill. Taxes are in deliberately: the 4%-rule research this rate is graded against measures gross withdrawals, and leaving the tax out read a tax-deferred-heavy plan one tone safer than it is. It drifts up in down markets and typically falls when Social Security starts.
Not the same rate the guardrail watches
Two different ratios in this app share the name "withdrawal rate", and they are not interchangeable:
- This one, meaning the KPI, the chart, and the year-by-year table, counts the dollars actually drawn from the portfolio.
- The guardrail's trigger counts total ongoing spending, including whatever Social Security and pensions pay for.
Both divide by the same start-of-year portfolio, so the guardrail's rate runs above this one, often far above it for a plan where benefits cover much of the spending. That is why the guardrail's cut/raise thresholds are not drawn on the Withdrawal rate by age chart: laid over this line they would suggest cuts and raises at the wrong moments, sometimes in the wrong direction. What the guardrail actually did is in the Spending strategy panel's own chart.
Under VPW or % of balance there is no trigger rate at all. Those are different rules, and picking one means you did not pick the guardrail. Those rules read the same start-of-year balance this KPI divides by and set spending from it directly, so the rate stops being a warning about the plan and becomes a description of the rule you picked. The app treats it that way: the KPI drops its green/amber/red grade and the chart drops its safe-ceiling line, because that ceiling is the highest fixed real draw that survived history. VPW's percentage deliberately rises past it with age, and grading the rule's own schedule against a fixed-plan benchmark would paint its design as danger.
Treat it as a smoke alarm, not the verdict. The success rate from the full simulation is the real test. Amber with a high success rate usually means your selected spending strategy, whether Guardrail, VPW or % of balance, or later income is doing real work. Check what that cost in the Spending strategy panel.