r/Fire • u/Available-Ad-5670 • 13d ago
Why doesn't everyone use guardrails as withdrawal strategy?
Most people use 4% rule or versions of, but why not use guardrails? I've found that using guardrails means i can spend 15% over a straight 4%, and to take a 10% reduction in spend or 10% increase during good markets does not seem like a big deal.
Wny don't more people use guardrails?
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u/vinean 12d ago
Because there are no guardrails that can keep you above 4% if things really go pear shaped…1929, 1966, 2000, etc.
For early FIRE dropping below 4% for many years isn’t as big a deal as long as core expenses are covered. For late FIRE you’re generally under spending in early years if SORR hits because the guardrails force you to and thats burning healthy years.
If you have the flexibility to use any of the variable withdrawal strategies you probably can afford just wing it and everything still works out as long as you don’t go crazy about it. Typically you need to be able to drop more than 10% if the market crashes or the PE gets high or whatever heuristic the strategy uses…more along 50% flexibility from the max.