Spending Guardrails

Fixed spending against spending that bends with the market: the same thousand markets run both ways, showing what guardrails buy in survival and what they cost in years of reduced spending.

Guardrails

Act when the rate drifts

Cut spending by

Raise spending by

Never cut more than

Never raise more than

Household

Filing status

Your age

Plan through age

Spouse's age

Spouse dies at (0 = no)

Your sex

Your health

Spouse's sex

Spouse's health

Accounts today

Pre-tax IRA and 401(k)

Roth

Taxable brokerage

Cost basis

Dividend yield

Income and spending

After-tax spending a year

Your Social Security a year

Starting at age

Spouse's Social Security

Starting at spouse's age

Pension a year

Starting at age

Wages a year

Until age

Markets

Average return

Volatility

Inflation

Markets to run

Withdrawals and taxes

Draw accounts in this order

State income tax

Flat state rate

Heirs' tax rate on inherited pre-tax money

Medicare IRMAA surcharges

Markets survived with guardrails

…

Running the markets

Markets where spending is cut

…

Below plan in at least one year

Years below plan, when cut

…

Lifetime spending against plan

…

What guardrails paid, today's dollars

A steady 5.3% market could carry $111,150 a year. A plan above that starts getting cut in its second year.

Markets out of money by each age

How it works›

The rule. Each January the household compares its withdrawal rate, spending not covered by Social Security, pension or wages over the portfolio, with the rate its plan expected for that year at the steady return. More than the band above, spending is cut by the cut percent; more than the band below, it is raised. Moves persist, compound, and stop at the most you allow.

What it steers against. The plan's own path, not the opening withdrawal rate. A household bridging to Social Security at 70 draws heavily for a few years by design, and a rule anchored to the first year would read the later drop as a windfall. When the plan itself would run dry at the steady return, the rule steers against the most that return could carry, so an overspending plan is cut from the start.

The same markets. Both rules face identical return sequences, seeded so they repeat, which makes the gap between them the rule and not luck. Every market pays the full year-by-year taxes, RMDs and Medicare surcharges of the income planner.

Reading the result. Guardrails win on survival almost by construction. The cost is the share of markets with a cut, how long spending stays below plan, and how deep it goes. Fixed spending's lifetime share of plan falls below 100% only because spending stops when the money does.

What it leaves out. The Guyton-Klinger inflation rule, which skips a raise after a down year, and any cap on withdrawals in the last years of the plan. Inflation and income follow the plan in every market.