Financial Samurai’s Method
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 strong real return because CPI inflation was low. In a stagflationary regime—where real yields turn negative—the DSWR dictates a depressed nominal withdrawal rate precisely when inflation erodes 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 reprices downward. A nominal yield makes for a macro indicator, not a viable spending rule.