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For instance, if Fred and Wilma Flintstone begin with a $1 million portfolio and follow the ratcheting strategy, they might start with the standard $40,000 withdrawal. If their portfolio appreciates by 50%, they could raise their spending by 10%, reinforcing a sense of security in their financial planning. This approach is particularly suitable for retirees who value stability and prefer not to cut spending.
Guardrails Approach
Created by Jonathan Gnow and William Klinger, the guardrails approach sets boundaries for spending. Rather than sticking rigidly to a 4% or 3.5% rule, this strategy allows retirees like Fred and Wilma to begin with a 5% withdrawal rate, with upper and lower limits established.