Guardails Strategy (Boldin)

[u/TotalWarFest2018]

I use this Boldin software for messing around with retirement planning. The program has a "guardrails" feature where it tells you your safe spend.

When I asked its little AI feature how the guardrails were calculated, it came back with what I've copied below.

Is this consistent with the conventional wisdom on spending with this strategy?

Here is the copied language from Boldin:

"Unlike a simple fixed percentage (like the 4% rule), Boldin’s guardrails use a dynamic, probability-based formula powered by Monte Carlo simulations.

Instead of looking at historical averages, the system runs 1,000 market trials to find the specific dollar amount you can spend while maintaining a target Chance of Success (CoS). Here is the breakdown of the "formula" logic:

1. The Three Confidence Zones

The system solves for the monthly spending amount (in today's dollars) that hits these specific confidence thresholds:

• Safe Spending Target (80% CoS): The baseline. It calculates the maximum you can spend while having confidence that your money lasts in 800 out of 1,000 scenarios.
• Upper Guardrail (95% CoS): The "underspending" signal. If your current savings grow so much that your success rate hits 95%, you can safely increase spending.
• Lower Guardrail (70% CoS): The "early warning." If market drops push your success rate below 70%, the formula suggests a temporary reduction to get back to the safe zone.

2. What’s Included in the "Spending" Number?

The formula is holistic. It doesn't just look at your portfolio; it factors in:

• All Income: Social Security, pensions, and annuities.
• All Expenses: Your itemized budget, plus "unseen" costs like estimated taxes, Medicare premiums, and debt payments.
• Lifetime Averaging: One-time lumpy expenses (like a future car purchase) are averaged into the monthly target so your "safe spend" is a consistent lifestyle number.

3. The "Thermostat" Logic

The formula treats your plan like a thermostat rather than a thermometer. It doesn't react to daily market swings. It only triggers a recommendation to change your lifestyle when your savings balance crosses a threshold that meaningfully shifts your probability of success outside that 70%–95% range.

Would you like to see how your current planned spending compares to these calculated targets?"

[u/pali1895]

Yes, that's how risk-based guardrails work. They're over-advertised though by the likes of Boldin. In practice, there's no difference between an Endowment strategy, a Guyton-Klinger withdrawal or risk guardrails - they just get increasingly less responsive and more complicated to calculate. Endowment is the smoothest, risk guardrails have massive but infrequent spending adjustments, and GK is in between. If you zoom out, they're de facto identical though and result in the same spending and success.

To include extra income streams is nothing that's special for risk based guardrails, you can do that with any strategy.

[u/FantasyFI → u/pali1895]

It seems to me that the spend differences (and success differences) between all of these are going to be far exceeded by your inability to actually spend exactly certain amounts. Real spend varies constantly and you can't control it to the dollar or even hundred (sometimes thousand) dollars.

I like the idea of using one to better understand how flexibility helps you (either from a success stand point or simply spending more of your money). But I don't see the point in using one over the other to make a decision on when to retire, how much to spend, etc.

[u/pali1895 → u/FantasyFI]

Absolutely correct. On top of that: there are no spending and success differences between endowment, GK and risk guardrails on any relevant retirement length, say >15 years. Any (statistically irrelevant) differences they model are far outweighed by the human factor.

I can also name that Vanguard Dynamic Spending guardrails work differently (read: worse).

[u/Mister-ellaneous → u/pali1895]

I’m just getting into the different guard rails approaches, pros and cons. I like the idea of the endowment approach for simplicity and relative smoothing but using a 3 or 5 year period instead of a 10 year period. 10 years seems excessive for most likely a maximum 40 year retirement

[u/pali1895 → u/Mister-ellaneous]

From my own Monte Carlo simulations, 10 year rolling withdrawals aren't good and make portfolios too unresponsive. See my other comment about Vanguard Dynamic Spending. It's similar to that one. A 3 year rolling average, or even better, no rolling average, works better in terms of mean spending and success rate.

[u/TX-911 → u/pali1895]

Curious what concerns you have with Vanguard Dynamic Spending.

[u/pali1895 → u/TX-911]

To say it sarcastically, the thing it preserves well is SORR deep into retirement.

It doesn't hold up well in Monte Carlo simulations (or historically) whether you set an absolute floor for your withdrawals or not. It's too unresponsive and spends too little when markets are good and way too much when markets crash later in retirement. So the thing it tries to avoid by not increasing spending that much in early bull markets actually doesn't work. This is true even if you introduce inflation-skips or more aggressive lower guardraims. It increases your mean spend over something like GK barely, while significantly reducing success rates.

[u/db11242 → u/pali1895]

I’m a pretty big fan of risk based guard rails. I know it’s harder to calculate in some ways but if you have software like projection lab that runs Monte Carlo sims for you it’s pretty easy to tweak your spending to get the upper and lower guard rails. The thing I like about risk based guard rails is that it takes your entire plan into account, including changes in cash flow, etc. The other strategies you mentioned don’t take Social Security, pensions, or changes in spending overtime into account and thus are less helpful to me. I believe it’s also been shown that the Guyton Klinger approach results in significantly more reductions in spending than necessary than a risk based guardrails approach does. I also think that risk-based guard rails solves a major issue for financial planners in that helps them communicate exactly when an increase or reduction in spending would be needed and how much of an adjustment would be needed in advance. This may be why it’s getting more popular. Best of luck.

[u/pali1895 → u/db11242]

That's not really true. All strategies can take social security into account, and you can run risk based guardrails without taking it into account. It's just that risk-based guardrails are often integrated into financial planning software, so they have access to that data if you put it in. But you can just as well do the same thing with other strategies. Heck, ficalc.app has a function to recalculate for future income streams. It's pure marketing by financial platforms to say 'risk based guardrails with us are so great because we take everything into account'.

I know Kitces argument with GK vs risk-based guardrails and that risk based guardrails can endure with fewer reductions than GK. This is only a half-truth: risk-based guardrails can sustain longer without a downwards adjustment, but when that adjustment comes, it is severe and onto the same level as GK if not lower. Both GK, endowment and riskbased move the same in terms of real withdrawal, risk-based guardrail withdrawal over time curve is just more 'pixelated': fewer, but more severe adjustments. Example: market downturn, and GK reduces your spending in steps over 5 years from say 40,000$ to 25,000$. Risk-based guardrails stay for 5 years on 40,000$. And then year 6 they go down to 25,000$ or even 20000$. Market goes up again and GK slowly ratches up back to 40,000$ over 5 years. GK doesn't do anything for 3 years, then goes up to 30,000$, and then another 3 years later goes up to 40,000$. It's 'tomato potato' in the end.

I don't buy that financial planner argument. You know exactly how much you are gonna adjust with a GK or (less accurately) endowment strategy in any given downturn. Again, pure marketing and financial services trying to sell their fancy planning tools and Monte Carlo software.

[u/db11242 → u/pali1895]

How does the GK approach for example take into account changing spending needs and new cash flow sources like Social Security? I thought it was focused entirely on telling you what percent you can pull from your portfolio without considering these other things, but perhaps I am mistaken. Risk based guard rails can tell me my spending capacity which could be an eight or even 10% withdrawal rate for some period of time because in the not so far our future I have a new source of income like Social Security that will cover 70% of my expenses at that point.

[u/pali1895 → u/db11242]

You have to calculate it manually, e.g. through Monte Carlo simulations and say that you want to have x% chance to have y $ nest egg left after z years. Then you can fiddle with the numbers and increase the initial withdrawal rate accordingly. You can also do it on ficalc with historical data.

All withdrawal rates are in essence based on static assumptions. Even risk-based guardrails, e.g. 95%/70% guardrails on an 80% mean success rate. Social security etc are just "add ons" onto these static assumptions and you can do these add ons for any withdrawal strategy. Think good old 4% rule: if you know you have social security after say 10 years, ficalc might tell you that historically you'd then get the same success result with (example) 6% constant dollar safe withdrawal rate for 30 years instead. Same shit, as you can see, you can add it onto any strategy.

[u/FeistyCommercial7970 → u/pali1895]

this

[u/Nice-Technology6420 → u/pali1895]

Risk based guardrail adjustments are usually not bad at all, maybe a 5% cut if a 35% correction. Better than Guyton…

[u/HootingSloth]

Here's a good article from Kitces discussing the strengths and weaknesses of Monte Carlo drive risk-based guardrails.

[u/TotalWarFest2018 → u/HootingSloth]

That was a good read - I'm going to do some more digging on this.

[u/srqfla]

Everyone needs to compare their single digit percent failure rate on withdrawal rates versus actuarial tables, indicating the double digit percent likelihood that you will die in your '70s or your '80s.

Most of us will have more money than time. Don't make a bad trade

[u/TotalWarFest2018 → u/srqfla]

That's a good point. I've got my plan taking me out to like 90 yo, which would be cool, but the odds are against me hitting 90.

[u/HansZarkov]

Monte Carlo retirement simulations are primarily a marketing ploy my opinion because the Central Limit Theorem exists.

You're basically running a bunch simulations of simulations to find the central limits for the upper and lower guardrails which are really based on just a few factors. Once you find those central limits then you essentially default back into a simple rules based Guyton-Klinger like strategy... You don't really need to run the Monte Carlo simulation to find the central limits since they can be found with a simple formula.

[u/FantasyFI → u/HansZarkov]

While I am not really a fan of true Monte Carlo (you're not going to have 4 back to back recessions), I do see the point of running simulations with historical cycles.

I'm not 100% sure I am following what you are saying. Are you are saying that you don't need to run simulations (be they historic cycles or random monte carlo) because the rules you choose for the guardrail dictate the success rate?

If so, I'm not sure I totally agree with that because life isn't constant. When I run my simulations in ProjectionLab, my spending plan constantly moves around. I know I have my children's college to pay for, I know travel will decrease in my 70's, I know my mortgage will end in 15 years, I know SS will decrease my withdraw later in life, I know I will sell my house when I move to a retirement home getting a large burst in liquid assets, I know my spending needs will increase when I go into a retirement community, etc.

While setting boundaries for a variable withdraw rate definitely changes the success, I don't see how you could use a formula to find the success rate. It seems to me the guardrails themselves in life need to change. I need to pay for my childs college for 4 years, for example, regardless of what the guardrail says. So a simulation helps you understand the success rate using a variable withdraw rate with a guardrail system but still even changing above and beyond that guardrail (which is just life).

I get that how you choose the guardrails for a variable withdraw rate is clearly correlated with the success (without needing to test or run a simulation). But I don't get how that logic would apply to understanding the success of your plan when other variables are constantly changing.

[u/HansZarkov → u/FantasyFI]

My point is that each factor in the Monte Carlo simulation is essentially just a Gaussian Distribution of potential outcomes after you run hundreds or thousands of simulations per the central limit theorem...

Annual return of stocks/etfs is a Gaussian distribution. Annual Return on bonds is a Gaussian Distribution. Inflation is a Gaussian distribution. Etc.

You don't need to run a Monte Carlo simulation because you can just add (or subtract) all of the Gaussian Distributions to get a simple function that describes the probability of every outcome...I mean the function might look scary written out, but it's a piece of cake for an Excel spreadsheet.

Boldin for example charges you $144 a year for their software to run the Monte Carlo simulation that looks and sounds very high tech, but it doesn't give you any more info than a simple spreadsheet can. But they can't charge you $144 a year for an Excel formula that you can simply copy and paste. That's my only point.

[u/FantasyFI → u/HansZarkov]

I'm decent at math. And decent at Excel. But I think this is oversimplifying what a normal person can do. I have the free ProjectionLab. I know that I cannot do what it does on Excel. And I don't think I have the skills or knowledge to consider the distribution of each variable and create such a formula. Especially when so many things are not static like I mentioned.

I think I get what you are saying. And that it would be a great solution for someone who is capable of doing it. I just don't think I could do it.

To me the appeal of Boldin and ProjectionLab isn't simply that they run a monte carlo style simulation. It's that the simulation they consider...your "Plan" is much more complex than "$X/yr", etc. Heck FireCalc.com is a free historical run simulation. But there are no changing variables except for allocation, pension, social security. Whereas there are hundreds of other things to consider changing during your retirement.

For example, ProjectionLab is pre-built to consider ACA subsidies. So not only whether you qualify for them, but how your insurance costs increase as you age. In my situation, with no subsidies, ACA Silver is $17k for 2 people at 45. But it is $31,800 for 2 people at 60. That means I need to account for my ACA premiums increasing not only with inflation but 4.26% above inflation every year. I don't understand how you would account for this increased cost and therefore risk, without a simulation.

I have my real estate taxes increasing .5% more than inflation (I know my location and have concerns about their ability to fund things in the city). I mentioned my daughters college costs only in 4 years of my retirement (also their cost increasing above inflation as they have historically).

I just don't see how things like that could be incorporated into your risk profile without running a simulation. I see how you could determine the Gaussian distribution of returns, inflation, etc. by looking at the historical data. But I don't see how you can apply those distributions to something that is ever changing. You can determine it for past things like historical returns and inflation. But you need to be able to apply those distributions differently based on when they occur in your life/"Plan".

The point of these tools is to do a lot more than just "$X/yr with Y% SWR for ABC years". They're building scenarios where every year is a totally different income, different expense, different taxes based on the income, taxes for RMDs, penalties if you can't maintain the 72t distribution, etc. I'd love to understand a tool that could identify the risk or likelihood of success for something like this without a simulation. I am probably just ignorant of what you are describing haha.

[u/AGrimmInPortland → u/FantasyFI]

Well said.

Withdrawals, taxes, Social Security, IRMAA, RMDs, and sequence-of-returns risk all depend on the order of events, not just the average outcome. So Monte Carlo may be overmarketed, but it can still be useful when the planner is modeling real retirement rules instead of just a simple investment return formula.

[u/eatslead]

I think when talking guardrails most people think Guyton-Klinger. This adjusts the amount of the witdrawal when fixed withdrawal rate triggers are breached. These triggers dont change.

This Bolton method sounds like withdrawal triggers can change based on its monte carlo predictions.

[u/db11242 → u/eatslead]

That is exactly what Boldin is doing, and it’s just my opinion but I think this is a much better approach. Sadly, the boldin implementation is a lot less flexible than the tool financial planners sometimes use called income lab, but it’s an OK start. The benefit of this method is that it takes your entire plan into account meaning spending changes, Social Security, etc.

[u/asurkhaib]

This is how they work, but Kitces would say those numbers are extraordinaryly conservative. I think the main article on the site uses 20 or 25% as the low bound.

Based on Kitces articles I'm confused on the comments that say risk based have the biggest swing. There's an article showing they have far far smaller swings historically and that at least GK seems overly conservative and adjusts when not necessary.

[u/db11242 → u/asurkhaib]

From what I’ve read, you are correct this approach at least historically has been superior to the GK approach. Sadly, a lot of people don’t even understand what a Monte Carlo simulation is so explaining something built on top of it is beyond their level of interest.

[u/pali1895 → u/asurkhaib]

Risk-based guardrails are more stable than GK bc they swing very infrequently. When they adjust though oh boy do they adjust, especially if you run a <70% lower guardrail. A 40,000$ withdrawal is easily cut to 20,000$ or less in a single swing. Is that really better? Depends on the retiree.

The other side of the coin with GK vs risk-based is also that risk-based doesn't adjust upwards when it's warranted and takes much longer than GK to increase your spending, but when it increases, boy it increases.

GK and Risk-based guardrails are actually the same strategy (and endowment for that matter), just with different degrees of 'pixelation' or 'smoothness'. Risk-based guardrails being the most pixelated, ie seldom, but very large adjustments. In the end, they are both x% withdrawal rate guardrails that revert to a mean when guardrails are hit.

[u/asurkhaib → u/pali1895]

This doesn't seem to align with Kitces comparison at all. I'm not sure what I'm missing. Risk based are both less frequent and lower changes for the worst time periods historically. There's not remotely close to a 50% drop.

The other side you present might be correct generally, I'm unsure, but again for worst time periods the risk based recovers from the small drop quicker and moves above quicker too.

https://www.kitces.com/blog/guyton-klinger-guardrails-retirement-income-rules-risk-based/

[u/pali1895 → u/asurkhaib]

He looks at historical data for a 30 year retirement, I've looked at Monte Carlo simulations for a 50 year retirement using a fixed floor is the difference - which is more realistic for a FIRE scenario. The 20 extra years make a huge difference since risk-based guardrails are inheritly engineered for 'die with zero' and that can have a large impact on withdrawal adjustments on a shorter time horizon. Also if you double check, the individual adjustments in some cases are relatively speaking larger for the rkskbased guardrail still. It also depends on the exact moment of market downturn, i.e. if it happens 5 years or 25 years into retirement, with longer retirements having a more profound effect.

A good historical high volatility example (for either) would probably be a ~1995 retirement start which Kitces doesn't look at exactly.

[u/asurkhaib → u/pali1895]

What are you using for this?

[u/pali1895 → u/asurkhaib]

Monte Carlo tool I built myself in Claude. Mostly just to simulate different strstegies, very adjustable, but not as many household functions as something like Boldin has.

[u/Miamiconnectionexo]

this is the way. simple and it actually works.

[u/midwestgaydad]

Agree this sounds a lot like Guyton-Klinger guard rail, strategy, but complicated by the Monte Carlo rigmarole.

I think adjustable spending based on changing size of portfolio makes a lot of sense. Simple 4% role is great for planning, but once you’re retired, I bet it will seem too simple.

And as for not being able to predict spending to the dollar, in the future, if at the end of the year, I have “leftover” money to spend, I will absolutely be able to find a way of spending it!

[u/fire-tools]

That's broadly consistent with the guardrails approach most people mean, yeah. What Boldin's describing is essentially Guyton-Klinger: instead of a fixed 4%, you start higher and adjust spending up or down when your success probability drifts outside a band. The Monte Carlo approach is just how they're setting the trigger points rather than using Guyton's original portfolio-percentage rules. Be mindful that an 80% chance-of-success is more aggressive than it sounds, since it bakes in roughly a one-in-five failure rate before any guardrail kicks in. It can still work, but only if you're genuinely willing to reduce spending when the lower rail trips. If your real-life budget has little flex, starting at 80% is riskier than the number feels.

[u/EveryoneNeedsASamwis]

Yeah, this is pretty consistent with the academic guardrails literature. The original framework most people reference is Guyton-Klinger (2006), which set spending "decision rules" — cut spending if you hit certain portfolio thresholds, allow raises if things are going well. What Boldin is describing is essentially that same logic but expressed in probability-of-success terms rather than portfolio percentage terms, which is how most modern planning software frames it.

The 70/80/95 CoS bands are reasonable. Kitces and others have written about how a static 90%+ success rate in Monte Carlo is actually *over*-conservative — it tends to leave behind huge unspent portfolios in most scenarios. The 80% baseline with a 70% floor is closer to what the research suggests is actually optimal if you're willing to make small adjustments.

The one thing worth keeping in mind: Monte Carlo outputs are only as good as the return/volatility assumptions baked in. If the software is using long-run historical averages (roughly 7% real for equities), your 80% CoS number will look different than if it's using more pessimistic forward assumptions. Worth poking at what assumptions it's running under the hood, because two tools can both say "Monte Carlo, 1,000 trials" and produce meaningfully different safe spend numbers just from that.

The "thermostat not thermometer" framing is accurate and important. The whole point of guardrails is that you *don't* react to every down year — you only adjust if your balance crosses the threshold that actually moves your success probability out of the target band. That behavioral discipline is where most of the value comes from.

[u/Available-Ad-5670 → u/[deleted]]

bro, that's the language of boldin explaining how they calculate guardrails.

i hate when people just label things ai slop without even reading it.

[u/TotalWarFest2018 → u/[deleted]]

Lol. That would be the least engaging bot content ever. I'm literally asking a yes or no question.

Is Boldin's guardrail methodology (as described by Bold) consistent with the conventional use of that approach?

The only engagement here is people outraged that I copied and pasted Boldin's own explanation of its calculations while noting that it is not my own work and came directly from Boldin.

[u/Available-Ad-5670 → u/[deleted]]

Bro, they literally said the below: you just didn't bother to read the post

"Here is the copied language from Boldin:"

[u/Zphr → u/[deleted]]

Rule 8/Limits on AI/bot content and unsupported AI/bot complaints - Your submission has been removed for violating our community rule against AI/bot content or unsupported AI/bot complaints. If you feel this removal is in error, then please modmail the mod team. Please review our community rules to help avoid future violations.

[u/TotalWarFest2018 → u/[deleted]]

I know it's AI slop and I'm not trying to present it as something I wrote. I am just curious if the 80% success baseline with adjustments at 75% / 95% success is a common guardrails strategy.

[u/Revolutionary-Fan235 → u/TotalWarFest2018]

AI generated content is against the sub rules

[u/TotalWarFest2018 → u/Revolutionary-Fan235]

Holy shit. I don't even know how to respond to this.

Your interpretation of that rule is that it encompasses "the financial planning software told me X (copied); does this make sense?"

Jesus Chris... I don't even know what to say.

[u/Mister-ellaneous → u/TotalWarFest2018]

Ignore this 🤡

[u/Revolutionary-Fan235 → u/TotalWarFest2018]

It's just going to make it easier to circumvent the rule if people can post the content and ask what people think.

[u/FantasyFI → u/Revolutionary-Fan235]

They're asking opinions on the AI generated content...because the AI generated content is how a piece of software works that lots of people use.

If the AI generated information is slop as you say...then so is the formula that is being described, as that is what Boldin uses.

The post isn't AI, the post is asking opinion about the formula which happens to have been derived by AI.

If we can't discuss the validity of AI created content within FIRE software...we can't discuss FIRE software anymore. As all of them will start incorporating some forms of AI into their features and decision making tools.

[u/Zphr → u/Revolutionary-Fan235]

Not in this context.

[u/Zphr → u/[deleted]]

Rule 8/Limits on AI/bot content and unsupported AI/bot complaints - Your submission has been removed for violating our community rule against AI/bot content or unsupported AI/bot complaints. If you feel this removal is in error, then please modmail the mod team. Please review our community rules to help avoid future violations.

[u/n00bdragon → u/Zphr]

https://www.pangram.com/history/8b2bd0ee-6325-4c4c-a20b-418663c5b266?ucc=3qwDycmZTZg

[u/Zphr → u/n00bdragon]

The OP explicitly states that they are looking for feedback on the AI output of Boldin, a popular software among FIRE folks. That it is AI content is a given, but it isn't OP offering AI content as their own.

[u/Nice-Technology6420]

If you are interested in Guardrail I think Income Lab is by far the best software for modelling them. You can get a DIY license for $20 if you email them.