Part 8/9:
For Fred and Wilma, they could allocate a portion of their spending as discretionary, allowing them to start with a higher initial withdrawal rate (for example, 5.25% instead of 4%). They can enjoy their desired lifestyle while also having the safety net of scaling down during downturns—a refreshing shift from rigid withdrawal strategies.
A Customized Approach to Retirement Spending
Ultimately, the key takeaway for retirees is personalization. Understanding your spending habits is crucial, as is recognizing when you might need to adjust your spending based on market conditions. While the 4% rule can serve a purpose in crisis scenarios, it isn't the only option, nor necessarily the best.