I believe that dealing with the variability in spending is an issue no matter what withdrawal strategy is being used. This whole experience makes me wonder if a withdrawal strategy is even needed. Some people just take out money on an as-needed basis and don't really have a strategy. I am curious what others are doing.
OK, here is what I am doing.
I withdraw according to very conservative rules that I wrote down in my financial plan. These rules are: no more than 3.5% and no more than my dividends for the prior year.
Then, during the year, I either:
1. Don't spend anywhere near that much because I have all I want; or
2. Spend more because some unusual big expense comes up. So far in 9 years of retirement, this only happened in 2015 when I bought my dream house. Other unusual expenses like my dental implants or new HVAC unit were covered by what I had withdrawn for that year already.
In 2015, I "borrowed" money from myself to buy my house, using some of the excess money that I could have spent, but hadn't spent, during previous years of retirement.
It's like when you are working. Just because your salary when working is thus-and-such, doesn't mean you will be spending every last cent every year. You build up an emergency fund and some savings. You put some aside for a rainy day, for those years when big expenses come up. And then if you unexpectedly need to use a little bit of it, you cut back and replace it after the fact so that you still have a nice cushion of savings in case you need it later on.
That's how I handle it, anyway. Unlike some others, I do re-invest what I don't spend each year and keep track of it in a spreadsheet. I don't know if reinvesting is a superior strategy but that is what I do.