Illustrating Dynamic Withdrawal Strategies With Timeline

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This video walks you through the dynamic withdrawal strategies available on Timeline, the sustainable withdrawal rate app.

These withdrawal strategies can be broadly classified into 2 categories;

  • Inflation adjustments are rule-based approaches on how withdrawals are adjusted for inflation each year during the retirement period. These include;
  1. Constant Inflation Adjustment (William Bengen’s original approach)
  2. Guyton Inflation Adjustment (by Jonathan Guyton)
  3. Cap and Collar Inflation Adjustment
  4. Fixed Spending (i.e no inflation adjustment)
  • Spending strategies involve making further adjustments to the withdrawal over and above inflation adjustments. These are rules-based increases or decreases in spending, depending on portfolio performance/outstanding balance at the end of each year. They include;
  1. Guardrails (by Jonathan Guyton & William Klinger)
  2. Ratcheting Rule (by Michael Kitces)

The inflation adjustments can be used on their own or combined with any of the spending strategies.

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