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The innovative aspect of this plan lies in the withdrawal method. While retirees initially extract $100,000 each year, the withdrawal amount will decrease in years when the portfolio value declines. For instance, in years where the portfolio suffers losses, the withdrawal for that year can be reduced by 10%—adjusting the total withdrawal for that year accordingly.
This strategy allows for flexibility in accessing funds during retirement, particularly in down markets. For example, if the value of the portfolio dips after several years, the subsequent withdrawals can be scaled back as a protective measure against further depletion.