## What is amortization-based withdrawal (ABW)
**Amortization-based withdrawal (ABW)** is a family of strategies that **recompute spending each year** from your **then-current investable portfolio balance** and **remaining years to longevity**. Unlike fixed-real or guardrail plans that target a steady inflation-adjusted budget, ABW spending **rises when markets are strong** and **falls after losses**. Analyzer offers two selectable modes: **VPW** (variable percentage withdrawal) and **TPAW** (portfolio amortization). Results are **illustrative**, not guaranteed income.
## VPW vs fixed-real (4% style)
**VPW** applies an **age-based percentage** of your year-start portfolio (Bogleheads variable-percentage schedule). A traditional **fixed-real** plan might target the same dollars in year one, but **holds that real budget** through retirement (with inflation adjustments). VPW **never locks** year-one spending — after a 20% portfolio drop, the next year's VPW draw is typically **lower** than fixed-real would require, which can **raise Monte Carlo success** by reducing sequence-of-returns stress. Tradeoff: VPW **spending is less predictable** year to year.
The VPW percentage **varies with your equity weighting**: a more **aggressive** allocation (higher expected return) withdraws a **higher** percentage, a **conservative** one a **lower** percentage — derived the same way the Bogleheads table is built (the amortization factor at the allocation's expected real return). A **70/30** mix reproduces the published Bogleheads column.
## TPAW vs VPW
**TPAW** amortizes your **total wealth** — the **portfolio plus the present value of future guaranteed income** (Social Security and pensions) — over your remaining years at your plan **expected return**, like a mortgage payment on the whole balance sheet. Because future income is treated as a **bond-like asset**, TPAW lets you **spend more before Social Security starts** (bridging the gap), then leans on that income once it begins. **VPW**, by contrast, uses an age × allocation **percentage of the portfolio only**. Both recompute every year, so spending floats with the portfolio.
## Where to set VPW or TPAW
Under **Planning → Household assumptions** or a **scenario's withdrawal policy**, choose **VPW** or **TPAW** under **Amortization-based (ABW)**. The **Withdrawal policy** panel shows year-1 portfolio withdrawal, total spending budget, and equivalent first-year rate. The **multi-year schedule** and **Monte Carlo** engine recompute retirement-year spending from simulated balances when these modes are active — and show the **full portfolio-driven amount** (not capped to your stated budget), so for a well-funded household VPW/TPAW spending can exceed your entered expenses. Set an **equity weighting** on the withdrawal policy to tune the VPW percentage.
## Pinning desired spending with amortization modes
If you set a **desired annual spending** override on a scenario (Living Standard compare), that **pinned amount replaces** amortization-derived spending in projections, but the policy panel can still show **what VPW/TPAW would have recommended** as a reference. Use this when you want a fixed comparison budget while exploring amortization policy labels.
Educational content only—not personalized investment, tax, or legal advice.