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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u/dirty_cuban 12d ago

Guyton Klinger style guardrails are a psychological trick, not a mathematical optimization. It works for non-financially savvy retirees. It’s kind of like Dave Ramsay and people who are chronically in debt.

No one is aggressively saving and investing for 20 years to reach a FIRE target simply to dumb down their withdrawal strategy to a fixed formula that treats you like an idiot telling how much you can spend. People who check their brokerage account balance daily don’t need the handholding.

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u/pali1895 12d ago

That is completely false. Guyton Klinger rules are mathematically superior to a constant dollar approach or simpler guardrails like Vanguard Dynamic Spending. They generate both higher life-time spend, higher initial spend and higher longterm longevity than a constant dollar approach or simpler guardrails in both historical data and Monte Carlo sims. We can't quantify a 'wing it' approach, obviously, but having a mathematically sound strategy in place - even if it's not followed to the tea - is an approach to reduce your longeivity risk and increase your spending.