The calculator
A 4.0% target with a +5.0% / −2.5% clamp starts at $40,000 and ends at $50,801, with a portfolio of $1,270,036.
How it works
This dynamic spending calculator follows Vanguard's published rule: a target of rate × current portfolio, then a clamp so the real change versus last year stays inside a ceiling and a floor. The usual defaults are +5% and −2.5%. After a 50% crash the target would collapse; the floor stops spending falling more than 2.5% that year. The Vanguard dynamic spending guide is the long form; the Guyton-Klinger calculator is the discrete alternative.
The rule exists to sit between two rules that each fail in an obvious way. Constant-dollar 4% ignores the portfolio completely and keeps writing the same cheque into a crash. A pure percentage of the balance tracks the portfolio perfectly and hands you a 30% pay cut the year the market halves. Dynamic spending follows the balance but limits how fast your income is allowed to move.
Calculating it by hand
The rule needs one multiplication and two comparisons a year, which is why it works in a spreadsheet as well as in a simulator.
- Target. Multiply your target rate by the current portfolio value, not the value you started with.
- Band. Take last year's actual spending and raise it by inflation. The ceiling is that figure +5%; the floor is that figure −2.5%.
- Clamp. If the target lands inside the band, spend the target. If it lands outside, spend the nearer edge of the band.
A worked year: $1,000,000 at a 4% target spends $40,000. The portfolio then falls to $700,000, so next year's target is $28,000 — a 30% cut. With 2% inflation, last year's spending indexes to $40,800 and the floor is 2.5% below that, $39,780. You spend $39,780, not $28,000. The clamp absorbed the crash, and the portfolio paid for it.
What the clamp costs
That last sentence is the part most comparisons leave out. Softening the cut has to be funded from somewhere, and the somewhere is the balance.
We ran the rule against three others across 5,000 seeded 30-year retirements on an identical $1,000,000 portfolio, changing nothing but the spending rule. Unclamped percent-of-balance ran out of money in 0.0% of them, because a percentage of a positive number is always positive — and it pushed real spending below $30,000 a year in 72.6% of them. Dynamic spending ran out in 10.0% of the same worlds. The clamp is what makes it able to fail, and the same clamp gives it the highest spending floor of the flexible rules.
Against constant-dollar 4% on the same worlds it delivered $17,834 more lifetime real spending in the median world and $198,351 less in the worst tenth. Which of those two numbers matters more is a question about you, not about the rule. The full study has the parameter stress and the 1928–2025 historical replay, including the windows where the ordering reverses.
Versus the other rules
Guyton-Klinger guardrails leave spending untouched most years and then make a discrete 10% cut when the withdrawal rate drifts outside a band — fewer adjustments, bigger ones. The Yale endowment rule blends last year's spending with the target instead of clamping the change. A side-by-side of nine withdrawal rules sets all of them against the same portfolio.
The locked-rate sibling is the 4% rule calculator. Unlock the rate on the safe withdrawal rate calculator. Spend a rising share of what is left with the VPW calculator, or set year one from valuations with the CAPE-based withdrawal calculator (the CAPE-based withdrawal guide explains the rule). The accumulation identity is the FIRE calculator and the Coast FIRE calculator; a distribution of endings is the Monte Carlo retirement calculator.
Assumptions
One return every year, no fees, no taxes. The clamp is applied in real terms (last year × (1 + inflation), then ± the cap). A constant return will not exercise the floor the way a real crash would, which is exactly why the simulated figures above come from 5,000 varying paths rather than from this page's single-path model.