The Only Other Spending Rule Article You Will Ever Need

This work describes an actionable framework for constructing and drawing income from a portfolio of retirement assets. A sufficient portfolio consists solely of a ladder of inflation-indexed bonds, such as U.S. Treasury Inflation-Protected Securities (TIPS), and a stock market index fund. We consider longevity risk and time-varying spending patterns and show how to amortize decumulation of the stock asset to provide variable income without risking premature portfolio depletion. We explain theoretically and demonstrate empirically how this strategy is less risky and more effective at maximizing lifetime retirement income than are methods commonly used by financial advisors.