Trim Line, Raise Line: Spending That Flexes

The story: Walt writes two lines

Walt writes a trim line and a raise line on a card, so a market drop or a strong year leads to a small, planned change in spending.

1. Narrator: Walt has $600,000 saved. With Social Security, Walt plans to spend $48,000 a year. These are example numbers.
2. Walt: I’m nervous to spend anything. What if the market drops right after I start?
3. Older adult: Write two lines first: a trim line below where your savings are now, and a raise line above.
4. Narrator: If savings fall below $500,000, Walt trims flexible spending by 10%. Essentials stay whole.
5. Narrator: If savings rise above $720,000, Walt gets a 10% raise on flexible spending.
6. Walt: With a plan for bad years already written, I can start a bit higher and worry less.

What you’ll learn

1. Two lines, in dollars of savings

   Write a trim line below your savings today and a raise line above it. Write what happens at each line, too. Deciding while calm keeps you from guessing in a scary market.

   Example: savings of $600,000 today. Trim line: $500,000, trim flexible spending 10%. Raise line: $720,000, raise it 10%.

2. Below the trim line, trim a little

   When savings fall below the trim line, cut flexible spending by the amount you set. A small trim in a bad year protects the years ahead. When savings rise above the raise line, take the raise you set.

3. Trim the extras, never the essentials

   Only flexible spending gets trimmed: travel, gifts, eating out, big projects. Housing, food, medicine and insurance stay whole. Knowing which is which is part of writing the plan.

4. Why it lets you start higher

   Behind the scenes, the lines come from your withdrawal rate: they mark when it has drifted too high or too low. Because you’ve agreed to trim in bad years, you can often start spending a bit higher.

Key words

trim line

a savings level that triggers a small spending cut

Also called: guardrail

raise line

a savings level that triggers a spending raise

Also called: guardrail

flexible spending

the part of spending you can trim, like travel and gifts

Common questions

How far apart should the lines be?

People set them differently. Lines that are too close mean frequent changes; lines too far apart act too late. A planner can help you test choices.

Do I trim forever once I cross the line?

No. Many people check once a year. If savings recover above the trim line, the trim can end.

Remember this

Below the trim line, trim a little. Above the raise line, enjoy a raise.

Try it: Write your trim and raise lines

1. Write your savings total today.
2. Pick a trim line below it and a raise line above it, in dollars.
3. Write how much you’d trim or raise flexible spending at each line, and keep the card with your money papers.

An index card or a sheet of paper (no account needed).