Static Strategies

Static strategies use rigid formulas that prioritize simplicity over adaptability.

Dollar-Plus-Inflation (The 4% Rule)

Established by William Bengen in 1994 and independently corroborated four years later by the Trinity Study of Cooley, Hubbard, and Walz — two separate pieces of work that are routinely merged into one — you withdraw 4% of your initial portfolio value in year one, and adjust that nominal dollar amount annually for inflation (section “Safe Withdrawal Rate — Why 4%?”). While simple to budget, it completely ignores market conditions. Retiring into a severe bear market risks early depletion (sequence of returns risk), while a bull market leaves an unnecessarily large surplus.

Fixed-Percentage

You withdraw a fixed percentage (e.g., 4%) of the portfolio balance every year. This mathematically guarantees you will never run out of money, as the dollar draw drops alongside a shrinking balance. However, your annual spending will fluctuate based on market performance, making budgeting difficult during market downturns.

Fixed-Dollar

You withdraw a flat nominal dollar amount every year, reassessing only after a set period. This provides total predictability, but leaves you completely vulnerable to inflation and fails to adapt to market performance.