We introduce the Deckards who are just starting their retirement. Like many retirees, they are concerned about how best to structure withdrawals from their investments to fund their retirement. Step by step, we move away from a risky and unstainable initial strategy to one that has a greater chance of success. The key change is to allow both the withdrawals and the portfolio asset allocation to adapt according to changing market conditions, while ensuring that income does not fall below a minimum level.

The result is that retirement investments are used more efficiently and the risks of prematurely running out of money, or withdrawals falling to an unacceptable level, are reduced. An additional benefit is that the portfolio asset allocation: the allocation to equities and how the bond allocation is structured, arises naturally from the Deckards’ income needs.