I am entering my 3rd year of retirement. Our strategy to fund our retirement has been pretty simple. We pretend each new year is the first year of our retirement. So at the start of each year, we:
(a) collect data on our current situation
(b) use that data to run calculations in I-ORP and Firecalc to determine the maximum yearly spending our portfolio can support
(c) set the current year's budget within that calculated value and free up enough cash in our portfolio for covering that budget.
This process is repeated each year. While this method will cause our budget to vary depending on the market ups and downs, it feels comfortable to us because we spend a lot on discretionary stuff so can cut back significantly if needed.
James Welch, provider of the I-ORP tool, has written a white paper which defines a very similar strategy he calls “3PEAT”. The name comes from doing 3 steps (similar to the ones above) and repeating them each year. The paper compares the performance of that strategy across 4 historical time periods vs 3 other commonly used strategies. He concludes:
“3-PEAT is a practical, safe procedure for managing income over the term of retirement. 3-PEAT avoids plan failures and, as compared to other variable withdrawal methods, increases disposable income, and reduces spending variability.”
If you have an interest in this withdrawal strategy, may be worth your time to read/review/comment on his draft document located at the bottom of his website ( https://www.i-orp.com/ ).
(a) collect data on our current situation
(b) use that data to run calculations in I-ORP and Firecalc to determine the maximum yearly spending our portfolio can support
(c) set the current year's budget within that calculated value and free up enough cash in our portfolio for covering that budget.
This process is repeated each year. While this method will cause our budget to vary depending on the market ups and downs, it feels comfortable to us because we spend a lot on discretionary stuff so can cut back significantly if needed.
James Welch, provider of the I-ORP tool, has written a white paper which defines a very similar strategy he calls “3PEAT”. The name comes from doing 3 steps (similar to the ones above) and repeating them each year. The paper compares the performance of that strategy across 4 historical time periods vs 3 other commonly used strategies. He concludes:
“3-PEAT is a practical, safe procedure for managing income over the term of retirement. 3-PEAT avoids plan failures and, as compared to other variable withdrawal methods, increases disposable income, and reduces spending variability.”
If you have an interest in this withdrawal strategy, may be worth your time to read/review/comment on his draft document located at the bottom of his website ( https://www.i-orp.com/ ).