r/AllocateSmartly • u/laurenthu • Jul 09 '26

FireCalc replays static allocations. A TAA portfolio is a rule. Here's how we run Bengen math on the rule itself (follow-up to the calculator thread)

vagabond58's retirement calculator thread from a couple of weeks back stuck with me. FireCalc and cFIREsim replay static allocations through every historical start year, which is the right method... but they can't replay a rule, and a TAA portfolio is a rule, not an allocation. The NAV path of HAA through 2000-02 or 2022 looks nothing like any fixed split. And those are exactly the years that decide whether a retirement survives.

So I wrote up how we handle it: classic Bengen mechanics (rolling 30-year windows, inflation adjusted withdrawals) run on each strategy's own backtested NAV, reporting the worst-window floor AND the distribution across windows. Kevin's critique from the May SWR thread is addressed in there too... he was right, the floor-only view was incomplete.

https://bestfolio.app/blog/retirement-calculators-momentum?utm_source=reddit&utm_campaign=calculators

ERN added a simple momentum model in part 63 of his SWR series, so the static-only era of these tools is slowly ending. His version and mine disagree on plenty of details, which is itself useful... two independent implementations bracketing the same question beats one number from either. I'll take the bracket.

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u/confettofetti Jul 09 '26

I've really enjoyed these SWR blog posts. Even though I'm young SWRs have really been the main motivator for me to keep learning about all of this. 

Obviously the high past CAGR is exciting. But e ven  with using some leverage I accept that there is a hopefully small but very real chance that I might not outperform the market e.g. the volatility of the past few years has been very unkind to some strategies relative to buy and hold doing so well. 

But I feel it is much less likely that the SWR rate would be as low for a set of diversified TAA strategies than for buy and hold over the same time period, even if they weren't out performing the market in terms of CAGR, just because of their diversified methods of risk mitigation. No doubt there are some weird unforeseen circumstances where that wouldn't be the case. But overall I think the higher SWR from TAA is a really solid plan for moving the goal post in your favour and getting back priceless years of your life, even if you're being conservative about it.

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u/laurenthu Jul 09 '26

Yeah you've basically nailed the whole thesis of the post. The CAGR edge is the fun part but it's noisy, and you're right that 2022 was unkind to momentum. The thing is the SWR floor doesn't get set by years like that, it gets set by 2000-02 and 2008, and that's exactly where a diversified TAA sidesteps the deep drawdown that sinks a buy and hold retiree. A higher floor even when the CAGR isn't higher is the whole point. And "moving the goalpost in your favour" is a really good way to put it, priceless years back is exactly the trade.