Yes, spending adjustments would be based on the portfolio performance, not the stock market performance. So for a 40/60 portfolio, a 50% decline in the stock market would translate to a .40 * 50% = 20% spending decline. Also, withdrawals are calculated based on the total portfolio, not the savings portfolio. So it's the change in the total portfolio that counts, which will be less volatile than the savings portfolio if there are pensions. If, for example, half of wealth is in the form of a pension, spending would decline by only 10% in the above example. In addition, if expected returns are based on valuations and adjusted upwards after the stock market drop, the spending decline will be less than that (see learn -> spending adjustments). Also, if legacy is invested more aggressively than retirement spending, that's another reason retirement spending will drop less than the portfolio.If I have a 40/60 portfolio and the stock market drops 50%, my portfolio would drop by 20% and that's how much I'd have to reduce withdrawals. Is that correct?
So there are several layers separating a spending decline from a stock market decline. Spending will usually drop significantly less than the stock market. As slowriter said, you can look at the 5th percentile of the spending graph to get a sense of what your spending will be if the market does really badly.
Statistics: Posted by Ben Mathew — Thu Nov 13, 2025 11:24 pm — Replies 1826 — Views 609254