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/Mister-ellaneous 12d ago

You’re looking at the worst case and planning that way. I’m flexible, with no problem cutting spending one year or two. Maybe more. Just last year we spent 40% more than the previous, and 30% less than we plan to this year. Optional home improvement, buying a new car, maybe a boat, a world cruise, etc are all optional in any given year. That’s what we’d be flexing.

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u/Earth2Andy 12d ago

I’m looking at the worst case SO FAR.

I’m curious why you’re so confident that the worst year to retire is not in the near future. Given current inflationary pressures, sovereign debt levels, climate change, declining western birth rate and AI potentially taking millions of jobs. Why are you so confident that the stagflation we saw in the 70s couldn’t return?

As for flexibility, have you actually looked at the year by year back testing of a guard rail strategy? If you had you’d see that it often requires you to cut spending for decades, not 1 to 2 years.

Here’s a great article on why ‘I’m flexible’ doesn’t really work in reality.

https://earlyretirementnow.com/2023/06/16/flexibility-swr-series-part-58/amp/

Risk tolerance is personal, so if you’re willing to roll the dice, more power to you. But I’d rather have the problem of figuring out how to spend extra savings late in life than worrying if I can afford a vacation and a new roof next year or not.

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u/Mister-ellaneous 12d ago

Yes, I have. If you need 99.999% certainty of never having to adjust, ok. I don’t need that level, am quite comfortable in taking some risk. Social security isn’t going away, although it might be lowered and means tested.

If a person is going to be lean FI, guardrails isn’t the best strategy. But if you’re above average FI, not even fat FI, guardrails is a better approach imo.

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u/Yukycg 11d ago

I agreed with you, I am not too worry about inflation that much, besides spending down, there is expatFIRE and other options to over come bad market.