A Written Withdrawal Plan: Rate, Guardrails, Tax Plan, Pension Timeline and the Yearly Review
Assemble the whole course into a two-page written plan with fixed numbers, triggers and actions, and run the yearly review that keeps it honest.
What you will learn
- The seven sections of a written withdrawal plan and the one number each must contain.
- How guardrails, floor, pension timeline and tax plan fit on one page.
- A yearly review with a fixed date, a checklist and a change rule.
- Which events force an extra review.
Explanation
An accumulation investment policy was covered in the course "ETFs, Funds & Long-Term Investing". A withdrawal plan (Entnahmeplan) is different: a set of decisions made in advance for a phase without new savings, in which every rule interacts with taxes, the pension and your age.
The seven sections
- Spending and floor. Yearly spending in today's euros, split into floor and discretionary (lesson 9). Number: the floor.
- Withdrawal rate and rule. Initial rate, dynamic rule (lesson 4) and guardrail triggers in euros. Number: the portfolio value below which you cut.
- Pension timeline. Claim age, amount net of deductions, Ausgleichszahlung decision (lesson 8), date of the next Rentenauskunft. Number: the gap after the pension.
- Allocation and glide path. Start and end equity share, years, bucket sizes, refill rule (lessons 5 and 11). Number: this year's target equity share.
- Tax plan. Order of sales, yearly use of the Sparerpauschbetrag, FIFO effects, Günstigerprüfung check, health-insurance status (lessons 6 and 7). Number: planned taxable gain this year.
- Flexibility levers. Each lever as trigger and action (lesson 12). Number: the maximum cut without touching the floor.
- Review. Date, checklist, who else knows where the plan is, rule for changes.
The yearly review
Fix one date, ideally early January. Steps: (1) record the year-end value in real terms; (2) compute the withdrawal rate = next year's planned withdrawal / portfolio; (3) apply the pre-written guardrail action, no more and no less; (4) move the glide path one step; (5) refill buckets if the condition is met; (6) book the tax items: realised gains, allowance used, Vorabpauschale; (7) update the pension line with the latest Renteninformation; (8) check law changes (Rentenwert, allowances, health-insurance rules).
Change rule: the plan is changed only at the review, in writing, with the reason noted. An unscheduled review is allowed for life events (health, divorce, inheritance, a move) and for a portfolio fall of more than 25 percent since the last review; even then the actions come from the pre-written levers.
Worked example
Hypothetical example: Jonas from lesson 8 writes his plan at 55. Portfolio €900,000; spending €36,000 (floor €24,000); pension €20,410 a year at 67 (40 points × €42.52 × 12, as of July 2026, updated yearly). Fees ignored.
| Section | Jonas's entry |
|---|---|
| 1 Spending | €36,000 in 2026 euros; floor €24,000; discretionary €12,000; inflation-adjust every January |
| 2 Rate and guardrails | Initial 4.0 percent. Ceiling rate 5.0 percent → cut 10 percent; floor rate 3.2 percent → raise 10 percent. In euros: cut if portfolio < €36,000 / 0.05 = €720,000; raise if > €36,000 / 0.032 = €1,125,000 |
| 3 Pension | Claim at 67 (2031); €20,410 gross; gap after 67: €15,590; Ausgleichszahlung decision at 60 after a new Rentenauskunft |
| 4 Allocation | Equities 35 percent rising 2 points a year to 55 percent at 65; cash bucket 2 years of floor (€48,000); bond bucket 8 years of floor; refill after any positive equity year |
| 5 Tax | Sale order by gain share per lot; realise gains up to the Sparerpauschbetrag every December; review health-insurance basis yearly; Steuerberater check at 62 on Günstigerprüfung |
| 6 Levers | Cut: up to €12,000 (33 percent) without touching floor. Income: if portfolio < €650,000 before 62, seek part-time work for two years. Move: not planned |
| 7 Review | Second Saturday of January; checklist above; copy with his partner; changes only at review |
A review in action. After year 1 the portfolio is €760,000: €36,000 / €760,000 = 4.74 percent, below the ceiling, so no cut; Jonas withdraws €36,000 (inflation-adjusted), moves the equity target to 37 percent and does not refill the cash bucket because equities fell. After year 2 it is €700,000: €36,000 / €700,000 = 5.14 percent, above the ceiling, so the withdrawal is cut 10 percent to €32,400, all from discretionary spending. The income trigger (€650,000) is not reached. The decision takes ten minutes because it was made two years earlier.
Common mistake
Practice activity
Write the guardrail line for a hypothetical plan: portfolio €800,000, spending €32,000, ceiling rate 5 percent (cut 10 percent), floor rate 3.2 percent (raise 10 percent). State (a) the initial rate, (b) the euro triggers, (c) the withdrawal after a cut, and (d) the eight review steps from memory.
Show solution
(a) €32,000 / €800,000 = 4.0 percent.
(b) Cut if portfolio < €32,000 / 0.05 = €640,000; raise if portfolio > €32,000 / 0.032 = €1,000,000.
(c) €32,000 × 0.9 = €28,800, taken from discretionary spending.
(d) Record real value; compute rate; apply guardrail action; step the glide path; refill buckets if due; book tax items; update pension line; check law changes.
Limitations: trigger values must be inflation-adjusted each year, and a guardrail says nothing about whether the cut is bearable; that depends on your floor.
Key takeaways
- A withdrawal plan is a set of decisions made in advance: seven sections, each with one hard number.
- Guardrails, floor, pension timeline, glide path and tax plan must not contradict each other on review day.
- Review yearly on a fixed date with a fixed checklist; change the plan only in writing at the review, except for defined life events.
- Convert every percentage trigger into euros and a date; that makes the plan usable under stress.
Next step
This completes the course; the next course, "Financing & Cash Management for Small Businesses", applies the same discipline of written plans and cash-flow forecasts to running a business.
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