The approach proposed by Financial Samurai calculates a Dynamic Safe Withdrawal Rate (DSWR) as 80% of the current 10-year Treasury bond yield:
If the 10-year Treasury is yielding 3.5%, the DSWR is .
Why this rule breaks under stagflation. The DSWR’s elegance is its flaw: it anchors a real-consumption decision to a nominal yield. The original 1990s calibration assumed a 5% nominal Treasury yield offered a robust real return because CPI inflation was low. In a stagflationary regime—where real yields turn negative—the DSWR will dictate a low nominal withdrawal rate precisely when inflation is eroding your purchasing power. Worse, as the Federal Reserve hikes rates to combat inflation, the formula tells you to increase your withdrawal rate even as the equity portion of your portfolio is repricing downward. A nominal yield is a macro indicator, not a robust consumption rule.