Adding a floor to variable withdrawals.
Variable withdrawal schemes can often see us cut our withdrawals dramatically in retirement. It is tempting to add some kind of floor — a minimum withdrawal that we won’t go below. “Sure, the algorithm says to withdraw $27,500 this year. But that would represent an unacceptable reduction in my standard of living. It would mean giving up my mobile phone or cancelling internet or selling my house and moving to an apartment. Instead I will withdraw $32,000. After all, the market will probably bounce back next year, anyway.”