Endowment / Yale spending calculator

Universities do not spend 5% of last night's market value. They blend last year's budget with a target percentage of current assets so the operating spend does not jump 20% after one good year.

The calculator

First-year spending$50,000
Spending after the run$45,210Horizon completed
Ending portfolio$849,250

The hybrid

Next spend = (prior weight) × last spend × (1 + inflation) + (1 − prior weight) × target rate × current market value. Yale's public form is the 70 / 30 split. A household can use the same smoother so a crash does not force an immediate 30% cut, and a boom does not become a lifestyle.

Assumptions

No fees, no taxes. Compare with Vanguard dynamic spending, which clamps the year-to-year change instead of blending levels.

Frequently asked questions

What is the Yale spending rule?
A hybrid: typically 70% of last year’s spending raised with inflation, plus 30% of a target rate times current market value. Spending moves, but much more slowly than the portfolio.
Why would a household use an endowment rule?
It damps the year-to-year swing of a pure percent-of-balance rule while still responding to a long bull or bear market. Universities use it so the operating budget does not jump 20% after one good year.
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