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Exploring the Guardrails Withdrawal Strategy: Is It Right for Your Retirement?

Welcome to our latest blog post! Today, we're diving into the Guardrails withdrawal strategy, a flexible approach that could potentially transform your retirement income planning. Join us as we break down the concept, its origins, how it works, and whether it might be the right fit for your retirement journey.

Understanding the Guardrails Withdrawal Strategy:

Ever heard of the Guardrails withdrawal strategy? In this post, we'll unravel the details of this innovative strategy that adapts your withdrawal rates based on your portfolio's performance. Developed by financial planner Jonathan Guyton and professor William Klinger, this approach helps ensure that your retirement savings last longer, even in changing economic climates. Again, you start out with an initial withdrawal rate. Then you will adjust the rate as your portfolio changes. You should run the test at least once a year.

By establishing upper and lower limits to withdrawal rates, this strategy helps individuals strike a balance between enjoying their retirement lifestyle and preserving their assets. It allows for adaptability in response to market fluctuations and life changes, providing a practical framework for managing withdrawals. The Guardrails withdrawal strategy can play a pivotal role in retirement income planning, as it offers a tested framework for managing withdrawals throughout one's retirement journey.

This strategy may hold particular appeal if you wish to reduce your withdrawal amounts during bear markets to reduce your concerns about depleting your retirement savings. In contrast to more rigid and static withdrawal strategies like the 4% rule, guardrails provide a sense of security by lowering the risk of running out of money in retirement. In addition, this approach may allow for a higher initial withdrawal rate for those trying to maximize their income during the go-go years of retirement.

An Illustration for Clarity:

Imagine driving along a highway with guardrails on either side, ensuring you stay on the safe path. The Guardrails strategy works similarly, preventing your retirement savings from veering off track. It's all about adjusting your withdrawal rate to stay within predefined "guardrails" – upper and lower limits – as your portfolio value changes. Here’s another illustration that may resonate better for you. If you picture a railroad track, the initial target is the dead center of the track. You will then set "guardrails" on each side of the track, positive on one side and negative on the other. As long as you are within the tracks, you are fine. However, if you cross over the rail, you will need to make adjustments.

Why Guardrails Matter:

Running out of money during retirement is a legitimate concern. The Guardrails withdrawal strategy acts as a safety net, preventing you from going over the financial cliff. By adjusting your withdrawals based on your portfolio's performance, you can sustain your desired lifestyle while protecting your nest egg.

How to Apply the Guardrails Approach:

Let's delve into a real-world example to demonstrate how the Guardrails strategy functions during a bear market. You'll set an initial withdrawal rate and then establish "guardrails" above and below it. If your withdrawal rate strays beyond these limits due to portfolio changes, you'll make adjustments to stay on track.

Factors to Consider:

Before embracing the Guardrails strategy, consider a few factors. Are you willing to adjust your spending during market fluctuations? Do you desire flexibility in your spending habits? These questions will help you determine if the strategy aligns with your retirement goals.

In my opinion, I find it most sensible to utilize the 4% rule as a starting point versus 4.6% or higher per Guyton. This should allow for a reasonable adjustment for inflation, and then when necessary make periodic adjustments using the guardrails. I personally prefer a retirement income that is more predictable. While I am comfortable with making slight adjustments during market downturns, I want to avoid significant changes that would negatively impact my lifestyle in retirement. I believe that starting out with a withdrawal rate that is too high significantly increases the risk of experiencing a substantial decrease in withdrawal amounts later in retirement.


In wrapping up our exploration of the Guardrails withdrawal strategy, we've covered its origin, mechanics, and its potential benefits. While opinions vary, it's clear that the strategy offers an adaptable approach to managing your retirement income. Remember, the Guardrails strategy isn't the only option – there's no one-size-fits-all solution. By combining approaches and understanding the associated risks, you can confidently shape your retirement plans. For more detail on the Guardrails Strategy check out my podcast episode on the Guardrails Strategy.

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