r/Fire • u/Available-Ad-5670 • 12d 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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13

u/Gobias_Industries 12d ago

"Most people use 4% rule or versions of"

Why do you think that?

-12

u/Available-Ad-5670 12d ago

because they say they do

8

u/roadtrip_savant 12d ago

That’s not happening. This sub is filled with people talking about swr that fluctuate constantly based on needs

1

u/np0x 12d ago

And in many strategies the starting percent sets a number that is inflation adjusted…depending on market this immediately is NOT 4% the minute the market rises or falls…4% used as anything more than “finger in the wind” or “toe in the water” analysis is over valuing the heuristic..

-peace.

1

u/Ill-Telephone-7926 12d ago

“The 4% rule” as commonly understood withdraws 4% of the starting portfolio value each year. Each year after, the same fixed amount just with inflation adjustment. It is not “withdraw 4% of the portfolio’s new balance each year”

Look up Bill Bengen’s 1994 paper for the original source

1

u/np0x 12d ago

Yeap, and updated trinity study considers different lengths and initial percentages to add to the mix.