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Which withdrawal strategy holds up when markets fall?
Enter your portfolio, your mix of stocks and bonds and how much you plan to take out. See how long the money could last under four withdrawal approaches, and what happens when bad years come first. This is an educational what-if model, not a forecast.
How your withdrawals could play out
Full 30 years
fixed approach with bad years first; full 30 years with steady returns
With 4% taken in year 1 from $1,000,000, the fixed approach lasts the full 30 years with steady returns and the full 30 years if the first 3 years are bad. Dynamic spending and guardrails lower your spending in bad years instead: your lowest yearly spending would be $23,509 and $33,430 in today's money, compared with $40,000 in year 1.
These scenarios are made-up return paths built from your assumptions to show how strategies behave. They are not historical returns, not a forecast and not a recommendation of any strategy.
Educational estimate only – not financial, tax or legal advice. Results depend on your inputs and the assumptions shown below, are not guaranteed, and may use figures that are out of date. Check the official sources yourself and consider a licensed professional before you decide. Full disclaimer
General information only. It does not take into account your objectives, financial situation or needs; consider whether it is appropriate for you and read the PDS and TMD before acquiring a financial product.
Compare the four approaches
Bad years first: -2.9% a year in years 1–3, 12.9% in years 4–6, then 5%. Same average as steady returns; only the order differs.
| Strategy | First-year withdrawal | Lowest yearly spending (today's money) | Years the money lasts | Left after 30 years (today's money) |
|---|---|---|---|---|
| Fixed, raised with inflation | $40,000 | $40,000 | Full 30 yearsruns out after 35 years | $192,754 |
| Lower fixed rate | $35,000 | $35,000 | Full 30 yearsruns out after 44 years | $421,861 |
| Dynamic spending | $40,000 | $23,509 | Full 30 yearsstill money left after 100 years | $577,975 |
| Guardrails (Guyton-Klinger style) | $40,000 | $33,430 | Full 30 yearsruns out after 46 years | $458,066 |
- Fixed, raised with inflation (solid line)
- Lower fixed rate (dashed line)
- Dynamic spending (dotted line)
- Guardrails (Guyton-Klinger style) (dash-dot line)
What if bad years come first?
With bad years first, the fixed approach still lasts the full 30 years, but ends with $192,754 in today's money instead of $278,891. Dynamic spending and guardrails adjust spending instead: the largest cut compared with year 1, after inflation, is 41% with dynamic spending and 16% with guardrails.
Bad years first: -2.9% a year in years 1–3, 12.9% in years 4–6, then 5%. Same average as steady returns; only the order differs.
| Strategy | Steady returns | Bad years first | Lowest spending, bad years first |
|---|---|---|---|
| Fixed, raised with inflation | Full 30 years | Full 30 years | $40,000 |
| Lower fixed rate | Full 30 years | Full 30 years | $35,000 |
| Dynamic spending | Full 30 years | Full 30 years | $23,509 |
| Guardrails (Guyton-Klinger style) | Full 30 years | Full 30 years | $33,430 |
How it works
The tool repeats one step for every year, for each approach and each scenario, with the withdrawal taken at the start of the year (the same step as How long will my money last?):
Balance at year end = (balance at year start − withdrawal) × (1 + return that year)
- Fixed, raised with inflation: take the first-year percentage of the portfolio, then raise that amount with inflation every year, whatever markets do. With steady returns this gives exactly the result of How long will my money last?
- Lower fixed rate: the same rule with a lower first-year percentage.
- Dynamic spending: each year, take the first-year percentage of what is left, but never more than 5% above or 2.5% below last year's spending after inflation (defaults you can change). Spending can fall even with steady returns: with the defaults, the withdrawal is 4% of the balance while the real return is about 2.4%, so the portfolio shrinks after inflation and spending ends up about 38% below year 1.
- Guardrails (Guyton-Klinger style): raise spending with inflation each year, except after a losing year when the current rate is above the first-year rate. If the current rate rises more than 20% above the first-year rate, cut spending by 10% (this rule stops 15 years before the end); if it falls more than 20% below, raise spending by 10%.
Your mix sets the expected return: share in stocks × stock return + share in bonds × bond return. The yearly ups and downs of the mix combine the stock and bond figures as if they move independently. The three scenarios use that return every year (steady), or that return minus the ups and downs for the first 3 years and plus for the next 3 (bad years first), or the reverse (good years first). Over those years all three have the same average, so any difference comes from the order alone.
Risks this model shows, and what it leaves out
- Sequence-of-returns risk: the same average return can leave very different results depending on when the bad years come. Losses early in retirement hurt more, because you are selling while prices are low. More on sequence-of-returns risk.
- Inflation risk: higher inflation raises a fixed withdrawal every year and shortens how long the money lasts.
- Longevity risk: the money has to last as long as you do; a 30-year horizon is a reference point from historical studies, not a prediction of your lifespan.
- Spending-cut risk: dynamic spending and guardrails protect the portfolio by cutting spending. Check whether you could live with the lowest amount shown.
- Not modelled: taxes, fees, other income, one-off costs, currency movements, real market history, changing your mix over time.
Assumptions
- One made-up return path per scenario, in yearly steps; withdrawals at the start of each year.
- The portfolio is rebalanced every year to your mix. Stocks and bonds move independently (correlation 0).
- The default return of 5% a year (7% stocks, 3% bonds at a 50/50 mix) and inflation of 2.5% are the site's example assumptions, the same in every calculator. Return and ups-and-downs figures are assumptions you can change, not predictions.
- No taxes, fees or other income. If you pay them from the portfolio, a higher withdrawal is the more cautious input.
- "Not retired yet": the portfolio grows at the expected return until retirement, without new contributions; amounts are shown in today's money. "Already retired": the first-year withdrawal is read as this year's withdrawal as a share of today's portfolio, and the scenarios cover the years that are left.
- The guardrails are a simplified version of Guyton and Klinger (2006): no rule for which asset class pays the withdrawal, the rules are checked once a year in the order above, and the study used 40- and 30-year periods and many simulated (Monte Carlo) paths. This is an illustration, not a copy of the study.
- This is a planning estimate, not a guarantee and not personal advice.
Sources
- Bengen, W. P. (1994). "Determining Withdrawal Rates Using Historical Data." Journal of Financial Planning, October 1994, pp. 171–180.: the fixed, inflation-adjusted approach and the 4% reference point.
- Cooley, P. L., Hubbard, C. M. & Walz, D. T. (1998). "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable." AAII Journal, February 1998 (the "Trinity study").: 30-year periods and the 50/50 reference mix.
- Guyton, J. T. & Klinger, W. J. (2006). "Decision Rules and Maximum Initial Withdrawal Rates." Journal of Financial Planning, March 2006.: the guardrail rules (withdrawal rule, capital preservation rule stopping 15 years before the end, prosperity rule; 20% triggers, 10% adjustments).
- Jaconetti, C. M., Kinniry, F. M. & DiJoseph, M. A. (2014). "A More Dynamic Approach to Retirement Spending." AAII Journal, April 2014. and Daga, A., Clarke, A., Pakula, D. C. & Bupp, R. (2021). "Sustainable spending rates in turbulent markets." Vanguard Research Note, March 2021.: dynamic spending with a 5% ceiling and a 2.5% floor on last year's spending after inflation. The 2014 article's Table 3 shows 3.5% as a reference point for a lower rate.
- Damodaran, A. "Historical Returns on Stocks, Bonds and Bills: 1928–2025." NYU Stern School of Business, data file histretSP.xls (updated January 2026).: the historical reference figures next to the asset mix (1928–2025), not used as defaults.
Last reviewed: 2026-10-17. See our methodology and disclaimer. Background: the 4% rule and withdrawal strategies. One steady return: How long will my money last?
Questions to ask a licensed adviser
- Which withdrawal approach fits my essential versus flexible spending, and how much could I cut in a bad year without hardship?
- How should my mix of stocks and bonds change before and during retirement, given my horizon and my need for stable income?
- What happens to my plan if markets fall sharply in the first years of retirement, and what would we do then?
- How do taxes and fees in my country change what I can withdraw each year?
- How do my state pension or other guaranteed income change the amount I need to take from savings?
- How often should we review my withdrawals, and what would trigger a change?
- What planning horizon should I use, and what assumptions about returns and inflation are you using?
- How are you paid, and are you required to act in my best interest?
FAQ
Does a 4% withdrawal always last 30 years?
Not always. In the Trinity study, a 4% first-year withdrawal raised with inflation from a 50/50 stock/bond portfolio lasted all 30 years in 95% of past 30-year periods from 1926 to 1995; at 6%, in 51% (AAII Journal, February 1998, Table 3). Bengen found no past case in which 4% used up a portfolio of 50% stocks and 50% intermediate-term Treasuries in less than 33 years (Journal of Financial Planning, October 1994, p. 173). Both studies use past US returns; future returns, other countries, fees, taxes and longer retirements are outside what they tested. This tool shows how 4% and a lower rate behave when the same made-up bad years come first; it does not say which rate to use.
What is sequence-of-returns risk?
It is the risk that poor returns come early in retirement, while money is being taken out. Two portfolios with the same average yearly return can end very differently: when the losses come first, each withdrawal takes a larger share of a smaller portfolio, and less is left to recover when returns improve. In this tool, "bad years first" and "good years first" use exactly the same yearly returns, only in a different order, so comparing the two shows the effect of order alone. With the default inputs, the fixed approach lasts 35 years when bad years come first and 38 years when good years come first.
What are guardrails in retirement withdrawals?
Guardrails are rules that adjust spending when the current withdrawal rate drifts too far from the first-year rate. The version here is based on Guyton and Klinger (Journal of Financial Planning, March 2006): spending is cut by 10% when the current rate is more than 20% above the first-year rate, except in the last 15 years, and raised by 10% when it is more than 20% below it. After a year with a negative return, the inflation raise is skipped if it would push the rate above the first-year rate, with no make-up later. The 20% triggers and 10% adjustments are default settings that can be changed. Our version is simplified: an illustration, not a copy of the study.
Can dynamic spending run out of money?
Yes, it can. Each year the withdrawal is a share of what is left, so spending falls when the portfolio falls, but only within set limits (by default at most 2.5% less and 5% more than the year before, after inflation). Once a cut hits that limit, the withdrawal becomes a larger share of a smaller portfolio and the money can be used up: with a 6% first-year withdrawal and the other defaults, dynamic spending lasts 29 of the 30 years when bad years come first. The trade-off is lower spending: with the defaults and bad years first, the lowest yearly spending is about 41% below year 1 in today's money. The table shows the lowest yearly spending for each approach.
Does this tool use historical market returns?
No. Each scenario is a made-up return path built from the assumptions entered: the same return every year (steady); the mix return minus its typical ups and downs for a few years, then plus for as many years, then steady again (bad years first); or the reverse (good years first). All three have the same simple average return. They are not historical returns and not a forecast. For context, the page shows long-run US reference figures from NYU Stern (Damodaran, 1928–2025).
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