Why does the constant, and sometimes even the future, dollar income fall when using the strategy that resets the withdrawal rate every five years to the safe (99%) rate?
It is because the increase in safe withdrawal rates between five year periods does not necessarily keep up with inflation. For example, if you retire at age 65 and have a life expectancy of 99, then you have 40 years remaining in retirement and will use the 4.7% as your withdrawal rate. At age 70, you have 35 years remaining and will set your withdrawal rate to 5.0%. 5.0/4.7 = 1.064, which means you would get roughly a 6% raise over your original withdrawal rate at age 65. But in the intervening 5 years you got raises for inflation. If inflation averaged only 3%, you would have seen more than a 15% raise in your nominal income, But when the withdrawal rate got reset with a 6% increase, you could very well see a decline. It all depends upon how well your portfolio did relative to inflation.
