Conventional wisdom in the financial industry is to build up as much wealth as possible (the trust-fund strategy) and then to spend a certain percent, say 4 percent, each year once you retire. But the 4 percent per year isn’t a fixed amount—the actual amount you receive depends on what’s happening in the stock market. That’s where the strategy goes wrong. A predictable salary, like the one you earned when you were working, should be the goal of your retirement fund. Most workers wouldn’t accept a salary that varies with stock prices—why should retirees?
