Hello and welcome back to The Moneyball, our weekly Wednesday show where we dig into the archives to give you one of our classic episodes from back in the day. Damien, welcome back. How you doing? Yeah, I'm good, Andy. And this week we are looking at retirement spending. So a couple of weeks ago on our Sunday podcast, we talked about the 4% rule and we looked at the sustainability of that particular rule and

asset allocation, but a natural lead on from that, which I mentioned in that show was to look

at the alternative strategy, so where you vary your spending to make it last throughout your

retirements. That means taking more when the stock market does well or less

when it underperforms. So what we are doing today is we're going to be playing a classic

episode that's about the dynamic spending method. So this was something that Vanguard produced a paper

and I'm going to talk about it in the show this week. You hear the clip. Now, I have to point out that it's really good if you're watching this on Spotify because you'll see what I'm talking about on screen because I do show some figures and some tools. If you're listening to this as an audio, it will be a little bit more confusing because I'll throw a few out, or quite a lot of figures, to be

honest, but it still works. But if you're not going to watch it on Spotify, you can go across

and watch the video on YouTube. So there was an original video to this particular episode on the

podcast. So we will put a link to that in the footnote of this show. So I want to start this

week's show by talking about an alternative to the 4% rule.

So the 4% rule was created by Bill Bengen, well, a couple of decades ago.

And it's a rule of thumb that's used to provide a sustainable retirement income.

So it's often applied to pension. So the idea behind it is that

if you withdraw 4% from your portfolio as a starting point, so let's just say for argument's

sake, you have a million pounds in a pension pot. If you were to take 4% in the first year,

so that would be 40,000 pounds. You then each year increase that fixed

40,000 pounds by inflation. And as that goes along, that should give you each year an inflation

protected income stream, but also that should be sustainable up to 30 years. So that was the

original idea of the research.

You should be able to get a sustainable income that could last 30 years. It means you wouldn't

run out of money. Now, we did do a podcast piece, episode 210 of the Money to the Masses podcast,

...