Guardrails
Your spending adjusts a little with the market: a small cut after a big drop, a raise after a big gain.
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- Markets slip, cut a little. If a downturn pushes your withdrawal rate well above where it started (say 20% higher), trim spending about 10%.
- Otherwise, hold steady. Most years nothing changes, and spending keeps pace with inflation.
- Markets soar, give yourself a raise. If growth pulls your rate well below where it started, raise spending about 10%.
Agreeing to small, temporary cuts in bad years is what lets you start out spending more than a fixed rule would allow.
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