Help Centre/Tutorials/How to use dynamic withdrawal guardrails

How to use dynamic withdrawal guardrails

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Summary

Guardrails is a dynamic withdrawal rule based on the original Guyton-Klinger research (Journal of Financial Planning, March 2006), later refined with William Klinger.
It compares your current withdrawal rate to your initial rate and adjusts spending up or down if it drifts too far, for a configurable number of years.
It's separate from Guyton Inflation Adjustment, an inflation rule that skips your inflation raise after a negative-return year.

Steps

1. Go to the Withdrawals tab on your dashboard.

2. Under the inflation rule options, you can select Guyton Inflation Adjustment — in years when your portfolio has a positive return, spending increases with inflation as normal; after a year of negative returns, the inflation raise is skipped, preserving capital when it matters most.

3. Under Withdrawal Rules, select Guardrails.

4. Configure the Prosperity rule: for the first N years (15 by default), if your current withdrawal rate has fallen more than a set percentage (20% by default) below your initial rate, withdrawals increase by a set percentage (10% by default).

5. Configure the Capital preservation rule: for the same period, if your withdrawal rate rises above a set percentage (20% by default) of your initial rate, withdrawals are cut by a set percentage (10% by default).

6. Set how often the rules are checked — anywhere from every year to every 5 years (every year by default).

Example scenarios

"My portfolio grew significantly early in retirement — will Guardrails increase my spending?"

Turn on Guardrails and check your current withdrawal rate against your initial rate on the Withdrawals tab. If it's fallen more than the prosperity threshold (20% by default) below where you started, within the guardrail period (15 years by default), your spending increases by the prosperity boost (10% by default).

"Markets fell hard in the first few years — what happens to my spending?"

With Guardrails enabled, if your withdrawal rate has risen more than the capital preservation threshold (20% by default) above your initial rate, your spending is cut by the capital cut percentage (10% by default) — a mechanism designed to protect the portfolio from being drawn down too fast after a poor sequence of returns early in retirement.

Frequently asked questions

What's the difference between Guyton Inflation Adjustment and Guardrails?

Guyton Inflation Adjustment is an inflation rule that skips your inflation raise in any year following a negative portfolio return. Guardrails is a separate withdrawal rule that changes your spending level based on how your withdrawal rate has drifted from where you started. You can use either, both, or neither.

What do the default guardrail settings mean?

By default the rules apply for the first 15 years of retirement: spending rises 10% if your withdrawal rate has fallen more than 20% below its starting level (prosperity rule), or falls 10% if it's risen more than 20% above (capital preservation rule), checked every year.

Is there a simpler alternative to Guardrails?

Yes — Floor and Ceiling caps the maximum year-over-year change in your withdrawals within a band you set, without the withdrawal-rate-drift logic Guardrails uses.