In a way, a systematic withdrawal plan is similar to the dollar-cost averaging and regular 401(k) purchases many savers are familiar with during their working years when they were building up their nest eggs. The systematic withdrawal can be explained as the reverse of that. During the accumulation stage, investors saved what they could every paycheck period. In retirement, a systematic withdrawal plan simply reverses that flow.
When it comes to taxation, a systematic withdrawal plan may actually be preferable to a pure income-based plan. After all, income is taxed at regular income rates, whereas systematic withdrawals out of a long-term holding would likely be taxed at a long-term capital gains rate. Although many different variables come in to play when calculating after-tax returns, a systematic withdrawal plan does have its advantages.
In the wake of this extraordinary, post-crisis environment, it does seem unlikely that fixed income can fulfill its traditional role of capital preservation and income within a portfolio. It is important to remain focused on the big picture: wealth and the preservation of it, not investment yield, will determine whether or not an investor will be able to meet their retirement goals.
*This post was updated 12/6/2018, original version was posted.