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Dynamic retirement spending

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  • Dynamic retirement spending

    I stumbled onto this article on Michael Kitces' site regarding dynamic spending and the impact of a small permanent reduction as compared to larger temporary reductions in spending.  Pretty good stuff and seems like a reasonable way to start withdrawing at a little higher rate.  I apologize if this has already been discussed on the forum.

  • #2
    I think the key is to be flexible. Don't get locked into any rule, whether it is a fixed rule or a dynamic rule. If return are terrible for your first 5-10 years of retirement, cut back. If not, feel free to spend a little more.
    Helping those who wear the white coat get a fair shake on Wall Street since 2011


    • #3
      Whenever I read about variable withdrawal rate strategies that allow higher withdrawal rates than the "standard" 4% most years, I think that's a risk I'm not interested in taking.

      I see how the math works, but if I were contemplating retiring with an initial withdrawal rate above 4%, I think I'd rather work another year so I could have the same budget without going over 4% in any given year. If you're already retired and don't have the luxury of (or interest in) earning income, then it might make sense to explore a VWR strategy. But of course, it can be somewhat difficult to cut back once you get used to a certain lifestyle. You know, the whole hedonic treadmill concept.





      • #4
        Michael Kitces blog is really good.  He has links to lots of interesting stuff on Fridays.  Some of his stuff is geared to running a CFP practice but lots of personal and behavioral finance stuff there too.  I have read his blog for several years.  I agree that flexibility is key.  I know from past experience that when you see a huge drop in net worth you will just naturally curtail your spending.