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;
- Constant Inflation Adjustment (William Bengen's original approach)
- Guyton Inflation Adjustment (by Jonathan Guyton)
- Cap and Collar Inflation Adjustment
- 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;
- Guardrails (by Jonathan Guyton & William Klinger)
- Ratcheting Rule (by Michael Kitces)
The inflation adjustments can be used on their own or combined with any of the spending strategies.