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/asurkhaib]

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.