Since many folks here like me are retired, I thought you might be interested in a set of mechanical rules for withdrawing from your portfolio to fund your living expenses each year. If your portfolio has 3 buckets - say 60% in an S&P 500 index fund, 25% in bonds, and 15% in CDs or money market funds - then these rules tell you which bucket to withdraw from each year, and what percentage to withdraw. The percentage can vary each year. Simulations were done to ensure you never run out of money over a 40-year retirement period. The strategy also increases your safe withdrawal rate.

The rules are based on the Guardrail Strategy developed by financial planner Jonathan Guyton and computer scientist William Klinger.

"The guardrails attempt to deliver sufficient—but not overly high—raises in upward-trending markets while adjusting downward after market losses. In upward-trending markets, in which the portfolio performs well and the new withdrawal percentage (adjusted for inflation) falls below 20% of its initial level, the withdrawal increases by the inflation adjustment plus another 10%.

According to this article at Morning Star "The benefit of adhering to those rules is the highest starting safe withdrawal amount of any system we tested. For a 50% equity/50% bond portfolio, the average safe starting withdrawal rate for a 30-year horizon with a 90% probability of success was 5.3%."

morningstar.com - Want boost your retirement income guardrails could help

To get an overview of the strategy, watch this video by CFP James Conole:

YouTube: Make Sure You Use This Withdrawal Strategy As Soon As You Retire (James Conole, CFP®)

The 5 rules he describes are:

Portfolio management rule

Treat the cash portion like an emergency fund. Each year, withdraw from stocks portion first, if stocks have outperformed. Withdraw from bonds portion if bonds have outperformed stocks. Withdraw from cash portion only if both stock and bond returns were negative the previous year.

Inflation rule

Adjust the withdrawal amount each year based on the inflation rate. But cap the increase at 6%. That's very important. If inflation was 3%, you can withdraw your annual amount plus 3%. But if inflation was 8%, withdraw the annual amount plus 6%.

Withdrawal rule

Don't give yourself a pay raise for inflation if your stock/bond portfolio declined last year, and your withdrawal rate would be greater than your initial starting rate. Note, if you're getting Social Security payments, these will be adjusted upward with a COLA increase.

Capital Preservation rule

If your portfolio has declined, your withdrawal percentage would normally increase, but you need to set a threshold for that rate.

Prosperity rule

If your stock/bond portfolio has grown such that your withdrawal rate is significantly lower than than the initial rate, give yourself a raise.

Yes, there's more complexity in following these rules than just using a fixed 4% withdrawal rule, but the complexity may be worth it.