4% Rule Results | The DoubleBucket Method

Variable Annuity Calculator Help

This page describes all the features of the DoubleBucket® Variable Annuity (DBVA) calculator and why you would want to use those features. Before diving into the details, we suggest just using the calculator with the default options to get a feel for how it's supposed to work. First, just press the "compute annuity table". This will generate an annuity table which shows how to diversify your assets through each year of retirement. The last column in the table is the withdrawal percentage that can be taken from the principal each year. Once you've generated the annuity table you can then analyze the results over all past spans. You do this by pressing the "historical analysis" button in the box below the annuity table.

Pressing those 2 buttons should be all you need to do to use the default values. You can then start experimenting with some of the other features of the calculator. At the top of the calculater, enter your current age, the age you want to retire., and the termination age, which is the age at which you will no longer need any income. Each row of the calculator represents an Asset Category. Each column represents a Time Bucket and the column must total up to 100. Note that before each Asset name we have a date which represents when data recording began for that asset. If you change any of the values in a time bucket column you probably need to change the "Exp Avg Ret" value for that column. This is very important as it will be used in the time-value-of-money calculation in the annuity table. If that number is too aggressive it could cause gyrations in your year to year withdrawals. If that number is too conservative, it will reduce the amount of money you withdraw early in the annuity span. What we typically do is look at the worst & average "CAGR minus inflation" averages from the Diversification Analysis Calculator. We usually pick a number between those 2 values, but usually on the low side to be safe.

Here are some details about the features of the calculator:

Immediate Bucket Length - This determines how many years of cash will be allocated for the "Immediate Bucket". Try the different options and see how the year ranges change on the calculator.
Current Age - Your current age. If you don't care about pre-retirement investments, make the Current Age & Retirement Age the same.
Retirement Age - Age at which you wish to retire.
Term Age - Age at which the Annuity will terminate (i.e., no longer pay out).
Dup 20yr - This will duplicate the 20 year column across all the other columns. Probably the only reason to do this is to do an historical analysis of the 4% rule for a constant allocation.
Defaults- Restores the default values.

Clear - Clears everything to zero.
The Columns - All of the numbers in white boxes are changeable, except for the "Totals" row. Each column must add up to 100.
Totals Row - Shows the total of the above column. It must be 100 before you compute the table. This is an output-only row.
Exp Avg Ret Row - Expected average (or minimal) return of the time bucket column

Once the Annuity Table is generated, you can then do a historical investment bucket analysis over all past spans. Just enter your total savings at your current age, the yearly contributions you expect to make during pre-retirement, and the beginning year of the 1st span you want to analyze. Note that the contributions will automatically increase to keep up with current inflation. You can also compare the results of the DBVA against a fixed rate (like the 4% Rule) which adjusts annually for inflation.

For more information on the Fixed Rate feature, please see our video on the 4% Rule on the Resources page.

There is a lot of data generated here, in somewhat of a poor format. However, it's in CSV (Comma Separated Value) form for easy import into other tools for further analysis.

Click here to go to the calculator. Enjoy!