How a Bear Market Affects FIRE Withdrawals and Timing

Wall Street’s quiet fear: it’s not averages, it’s timing

Here’s the insider truth: pros don’t lose sleep over average returns. They worry about bad returns showing up at the worst possible time. If you’re chasing FIRE, that “worst time” is the first stretch after you quit the 9-to-5. A bear market right after you stop earning can kneecap a plan that would’ve looked perfectly fine on a spreadsheet. I’ve watched otherwise sensible models crack not because the average was wrong, but because the sequence was cruel.

This isn’t abstract. In 2022, the S&P 500 fell roughly 25% peak-to-trough, and the Bloomberg U.S. Aggregate Bond Index dropped about 13% for the year. A classic 60/40 portfolio had its worst calendar year since 1937, down around 16-17%. Pair that with inflation peaking at 9.1% year-over-year in June 2022, and you had the nastiest combo for new retirees: prices up, portfolio down, and no paycheck to bridge it. That’s the sequence-of-returns risk problem, early losses matter more than later losses because you’re selling shares when they’re cheapest.

Average returns don’t blow up retirement plans. Early bad returns do, especially when paired with rising prices.

Over-explaining the obvious for a second: if your portfolio is shrinking and you still need $40k for living costs, you sell more shares to get the same dollars. Those shares are your future compounding engine. Fewer shares today means fewer dividends, fewer interest payments, fewer chips on the table for the recovery. Then the recovery finally arrives, markets do that, but your base is smaller, so even a strong rebound doesn’t catch you up. That’s locking in losses, and it’s exactly how a routine bear market morphs into a permanent hit. And just to circle back, this is why average return math can mislead; the path of returns matters more than the mean in those first years.

Why the first 5-10 years? Because that window sets the trajectory. If you retired into 2010-2019, you could basically make mistakes and still be fine. If you retired into 1966 (high inflation, weak stocks and bonds for years), you needed near-perfect discipline. Same math applies now. A 25% drawdown like 2022’s hurts at any age, but it’s brutal when you’re forced to sell to fund groceries, healthcare, the boring stuff. That’s how a bear market affects FIRE withdrawals in the real world, not as a scary chart, but as a higher withdrawal rate at the worst time.

Here’s what we’ll explain next:

• How sequence-of-returns risk actually works in early retirement (with simple, no-nonsense examples).
• Why spending from a shrinking portfolio compounds the damage and what knobs you can turn fast.
• What to do when inflation spikes while markets fall, the 2022 playbook, cleaned up.
• Practical guardrails for the first 5-10 years that protect you from the path, not the average.

None of this is about fear. It’s about timing, cash flows, and giving compounding a fighting chance when it matters most. And yea, the math is a tad unforgiving right after you quit, so we plan for that.

What a bear market really does to a 4% plan

Quick translation from headlines to math. The original 4% rule traces to William Bengen’s 1994 paper, which stress-tested the worst historical sequences (think the 1966 retiree who got hammered by inflation and weak real returns). It wasn’t built from average years; it was built from the ugliest paths and asked, would a 30-year retirement survive with an initial 4% withdrawal, inflation-adjusted after that? Answer back then: yes, across all rolling 30-year periods using U.S. large-cap stocks and intermediate Treasuries.

Now bring it to the 2020-2024 cycle. Morningstar’s research tightened and then relaxed as conditions changed. In 2021 they estimated about 3.3% as a static starting rate, given high equity valuations and low yields. By 2023, with higher bond yields and a more balanced outlook, Morningstar’s retirement income report suggested ~4.0% as a reasonable starting point with flexibility (guardrails, trims after bad years, the normal adult stuff). Their 2024 update essentially reaffirmed that ballpark, about 4.0% under baseline assumptions if you’re willing to adjust when markets and inflation bite. The flexibility part isn’t window dressing; it’s the plan.

Here’s the mechanical problem a bear market creates. Suppose you start with $1,000,000. A 4% rule says $40,000 in year one, then you increase that dollar amount with inflation. If your portfolio drops 25% early, something like 2022, when the S&P 500 returned about -18% and the Bloomberg U.S. Aggregate Bond Index fell roughly -13%, your balance is now ~$750,000. If you still pull the same $40,000, your effective withdrawal rate is $40,000 / $750,000 = 5.3%. If you give yourself a full CPI raise after that bad year, it gets worse: 2022 CPI averaged about 8% (BLS). A $40,000 payment becomes ~$43,200, turning into 5.8% of $750,000. That’s how a 4% plan quietly morphs into a 5-6% plan right when sequence risk is highest. Not theoretical, just cash flows and timing.

Translation: Withdrawal rate in any year t = Dollars withdrawn that year ÷ Portfolio value at the time you take it.

And this is why inflation adjustments matter. Full CPI raises after a drawdown can be the line between durable and fragile. You either lock in more selling at depressed prices, or you give the portfolio breathing room. It’s the same idea said a different way: your spending rule either amplifies the drawdown or cushions it.

The research “guardrails” lean into that reality. Whether you look at Guyton-Klinger-style bands or Morningstar’s flexible spending setups, the playbook is similar: start near ~4.0% if you’re willing to tweak. Typical knobs include:

• Pause or trim inflation raises after a bad year (e.g., skip the full CPI, or cap it at 0-2%).
• Cut real spending 10-20% if the withdrawal rate breaches a band (say, jumps above 5-5.5%).
• Let raises resume after recovery, so you don’t ratchet down living standards forever.

One more bit of context. Early 2020 saw a swift 30% equity drawdown that rebounded fast. 2022’s hit was different because stocks and bonds fell together, making cash needs harder to fund without selling losers. That’s the sequence-of-returns risk Bengen’s work warned about, alive and well in real time.

The takeaway isn’t “4% is dead.” It’s closer to: a fixed-dollar 4% that keeps auto-inflating through a bear market drifts into 5-6% territory. With guardrails, especially dialing back inflation after bad years, the same 4% starting point can still be fine. Same plan, slightly different behavior when it hurts, and that small behavior change is doing the heavy lifting.

Guardrails beat autopilot: dynamic spending that survives ugly markets

When markets go red, you need rules that pull your spending back without panicking… and when things are green, that same system should let you loosen up. Not by guessing, but by letting the math nudge you. Three workhorse approaches do this in the wild, and they’re all more “seatbelt” than “autopilot.”

Guyton-Klinger rules (2006) are the classic. The key moves are simple:

• Inflation raise most years, but pause after a losing year (no inflation bump if the prior year’s portfolio return is negative).
• Capital preservation rule: if your current withdrawal rate (today’s dollars divided by current portfolio) rises more than ~20% above your initial rate, cut spending 10%.
• Prosperity rule: if that withdrawal rate falls more than ~20% below the initial rate, boost spending 10%, and resume inflation raises.

That 10% tweak sounds small, but it’s doing the heavy lifting. Quick example: $1,000,000, 4% start = $40,000. If the portfolio falls 20% (not hypothetical, stocks were down −18.1% in 2022 and the U.S. Aggregate Bond Index fell −13.0%, both calendar-year total returns), your balance is ~$800k and your $40k now sits at a 5.0% withdrawal rate. You pause inflation and, if your guardrail is tight, you trim 10% to ~$36k. When markets recover, raises come back. Circle back to the point: you didn’t “sell the house,” you just eased off the gas.

Valuation-aware (CAPE-based) spending starts by asking, “Are stocks expensive right now?” The Shiller CAPE’s long-run average is around the mid‑teens (since 1881). When CAPE sits in a high bucket, think the top quartile historically, many planners shave the initial spend by ~0.5-1.0 percentage points; when CAPE is cheap (bottom quartile), they allow a comparable bump. In 2022, CAPE was still elevated coming into the drawdown (after 2021’s surge), which is one reason some folks started leaner. Today, late 2025, valuations aren’t dirt-cheap by long history, and rates are still far higher than 2020-2021, so a small valuation haircut isn’t crazy. I’m not saying CAPE predicts next year; it just sets expectations so you don’t ratchet too fast when prices are rich.

VPW (Variable Percentage Withdrawal) recalculates every year from your age and asset mix. You apply a percentage to the current balance, not last year’s. If markets drop, the dollar withdrawal falls automatically; as you age, the percentage rises, letting you spend more of what you’ve got left. Typical VPW tables (Bogleheads’ community version) show a 60/40 portfolio targeting roughly the mid‑4% range at age ~60, the mid‑5% range by ~70, and north of 7% by ~80. Not precision surgery, just a glide path that adapts without arguing with Mr. Market.

Simple guardrails also work: if your withdrawal rate drifts outside a 3-5% band, cut or raise spending 10% to steer back. That’s it.

One quick aside that matters. The reason these rules work is sequence risk. 2020 saw a −34% S&P 500 peak‑to‑trough drop in 33 days (Feb 19-Mar 23) that snapped back fast. 2022 didn’t: stocks and core bonds fell together, which made funding cash needs painful without selling losers. A rule that pauses inflation or trims 10% in that moment keeps you from locking in too much damage. Then, when green returns show up, you can actually turn the spigot back on.

And to clarify something I said earlier about “same plan, different behavior”: these systems don’t require a brand‑new retirement. You can start at 4%, use GK to pause after a down year, layer a small CAPE tilt at the start if valuations are rich, and let VPW logic nudge amounts as you age. It’s all the same idea, small, rules‑based corrections, just packaged a few different ways. I still keep a sticky note that says “3-5% band, 10% bump/cut.” Low‑tech, but it kept a couple clients calm in 2022 when both their stock fund and their bond fund had red ink on the same statement.

Cash buffers and rebalancing: 2025 playbook for damage control

I still like the boring answer here: keep 2-3 years of essential expenses in cash or short‑term Treasurys. Not the fun stuff, the basics, housing, food, insurance, taxes. The point isn’t to juice returns, it’s to avoid selling equities when they’re bleeding. If your annual need is $80k, a $160k-$240k “sleep at night” bucket buys you time through a typical bear and the recovery window that follows. Yes, cash didn’t pay much in the 2010s; today cash and T‑bills are still paying decent yields by comparison, so the carry cost of safety is a lot less painful.

The withdrawal order matters. Spend dividends and interest first (your bond fund is basically handing you a coupon stream, use it), then tap the cash bucket. Only sell equities after they’ve healed a bit. In 2022, that sequencing helped because both stocks and core bonds fell together: the S&P 500 total return was about −18% for the year and the Bloomberg U.S. Aggregate Bond Index dropped roughly −13% (its worst calendar year since the series began in 1976). When the two main engines stall at once, the cash runway is what keeps you from selling your future at a discount.

On rebalancing, make it mechanical. Emotion lies to you during drawdowns. Use bands, what many of us shorthand as “5/25.” That means you rebalance when an asset class drifts by 5 percentage points or 25% of its target, whichever is larger. If your 60/40 drifts to 52/48 because stocks fell, you buy stocks back to target. No debate, no hot takes, just wires and buttons.

Rule-of-thumb: Target 60% stocks. If stocks sink to 52% (an 8-point drop; that’s beyond the 5/25 band), you move cash/bonds into stocks until you’re back near 60%. Same in reverse when stocks rip.

That rebalancing habit quietly makes you buy after declines and trim after rallies. It’s systematic, not heroic. I’ve had clients swear they’d “wait for the dust to settle,” then miss the early snapback; the rule got them back in while their gut said no. And yes, your cash bucket is the funding rail for those buys when markets are down, because you’re not forced to sell stocks to buy more stocks; you’re spending cash for living and shifting bonds/cash for rebalancing.

Tax‑loss harvesting is the other lever during down years. A lot of investors harvested in 2022 because there were losses almost everywhere, U.S. stocks, international, and even core bonds. The practical move: sell the red fund, buy a similar (not substantially identical) ETF the same day, bank the capital loss, and keep market exposure. Those banked losses can offset $3,000 of ordinary income annually and, more importantly, offset future capital gains with no dollar cap. Small note, wash‑sale rules apply, so don’t rebuy the same security inside the 30‑day window; I’ve seen people trip that wire when reinvesting dividends.

Two quick implementation notes while we’re here. First, automate the cash bucket: set monthly transfers so you’re not “deciding” whether to sell each time, decisions in storms get worse. Refill the bucket during up years, ideally from rebalancing trims and dividends. Second, keep fees and taxes low, because the compounded savings are your shock absorber. Paying 1.0% all‑in on a $1,000,000 portfolio is $10,000 a year. At 0.20%, it’s $2,000. That $8,000 gap, invested and compounded over a decade, often covers a couple down years’ worth of withdrawals. Not exact math, but directionally right and it’s real money.

One last thing I’m guilty of forgetting: match your bond duration to the job. The cash/short‑term sleeve should be short because it funds spending and rebalancing ammo; the intermediate sleeve can take a bit more rate risk but still be high‑quality. In 2022 that mattered because long Treasurys got hit hard when yields spiked; you wanted your spending runway out of the blast zone.

Bottom line, this year, with cash still paying reasonably and markets choppy after a strong first half and a messy late‑summer pullback, the combo works: cash covers life, rebalancing buys what’s down, and TLH stores tax assets for later. It’s dull; it’s also what keeps you in the game.

Taxes and healthcare: FIRE’s hidden levers in a downturn

Early retirees have more control over the tax line than they think, especially when markets are down and withdrawals feel tighter. I know it sounds backwards, but a bear market is often when your tax playbook does its best work. If you’re wondering how-a-bear-market-affects-fire-withdrawals beyond portfolio math, this is it, taxes and healthcare.

Roth conversions when prices are down. Converting shares after a drawdown moves more units across the tax wall at the same dollar tax cost. Example: convert $50,000 of a stock fund that’s down 25%, and you’re moving 33% more shares than when it was at its prior high. Same tax bill, bigger future tax-free base. Pair that with bracket management, don’t wing it. Map how much room you have in your 12% or 22% federal bracket before you trip higher rates, and fill it intentionally with conversions.

Harvest losses and bank them. Tax-loss harvesting (TLH) offsets capital gains now and later. It also knocks up to $3,000 off ordinary income each year, with unused losses carrying forward indefinitely. That’s not theory; it’s the code. Loss carryforwards can wipe out unlimited future capital gains over time, carryforward rules are your friend during a choppy year like this one.

ACA premiums hinge on MAGI. The enhanced Affordable Care Act subsidies run through 2025 under current law, no 400% FPL cliff and a cap that keeps the benchmark silver plan’s premium near 8.5% of household income. Translation: managing Modified AGI isn’t a rounding error; it can cut health costs by thousands. Keep Roth conversions, long-term gains, and IRA withdrawals sized so your MAGI stays in the zone you want. Small moves matter when you’re on-exchange in your late 50s or early 60s.

Quick bracket facts to keep you grounded. The 0% long-term capital gains bracket in 2024 tops out at $44,625 (single) / $89,250 (married filing jointly); 2025 thresholds are slightly higher with inflation. The 3.8% Net Investment Income Tax (NIIT) kicks in at $200,000 MAGI for single and $250,000 for MFJ, those thresholds haven’t moved since 2013. Sequencing withdrawals, harvesting 0% gains, then conversions, then tapping pre-tax, can keep you under those lines. I’m oversimplifying, but directionally it works.

RMDs and QCDs. Required Minimum Distributions start at age 73 as of 2025 (SECURE 2.0). If you don’t need the income, Qualified Charitable Distributions (QCDs) are still allowed starting at 70½, paid directly from IRAs to charities; they don’t hit your AGI, which helps with NIIT, ACA, and later Medicare surcharges. The annual QCD limit is indexed for inflation now, check the current-year cap when you set it up.

IRMAA, yes, even if you’re not 65 yet. I said I’d come back to it: Medicare’s income-related monthly adjustment amount uses a two-year lookback on MAGI. For context, 2024 IRMAA tiers start around $103,000 (single) / $206,000 (MFJ), with 2025 thresholds modestly higher. If you’re 63 today and convert a bunch, it can raise Part B and D premiums when you hit Medicare. Not a reason to avoid conversions, just a reason to plan the slope.

• Use down years to convert more shares at lower tax cost.
• Harvest losses; bank them for future gains and that $3,000 ordinary income offset.
• Guard your MAGI to protect ACA subsidies through 2025.
• Sequence around the 0% LTCG bracket and NIIT thresholds.
• Remember: RMD at 73; QCDs at 70½ for tax and charitable goals.

The tax win in FIRE isn’t one big move; it’s a series of small, boring, repeatable choices, especially when markets are messy like late summer this year. I’ve botched the timing before, most people have. The fix is a calendar and a bracket map, not a heroic trade.

Social Security timing and glidepaths when markets are ugly

I think about delayed Social Security as buying more inflation‑linked income from Uncle Sam. It’s not flashy, but it’s a built‑in hedge against bad early returns. SSA rules are simple here: from your Full Retirement Age (often 67 for folks born 1960+), benefits increase by about 8% per year you wait up to 70, technically 2/3% per month. That means a 24% bump from 67 to 70. And the spread is bigger if you were planning to file at 62: roughly 70% of your PIA at 62 vs ~124% at 70, about 77% more income at 70, before COLAs. That’s real money, and it lands precisely when sequence risk bites the hardest, the first 5-10 years.

Put differently, delaying converts market risk into guaranteed, real lifetime cash flow. While your portfolio heals from a rough patch, like the chop we saw earlier this summer, it’s one less forced sale. Yes, there’s a breakeven age conversation (usually late 70s to early 80s), but sequence risk is about survival, not just breakeven math.

Now, pair that with a glidepath that doesn’t set you up to trip on Mile 1. The “bond tent” or rising‑equity glidepath popularized by Wade Pfau and Michael Kitces (2014) starts with a lower equity weight in the first years of retirement, then gradually increases it. Think something like 30-40% equities at retirement, rising toward 60-70% over the next 10-15 years. The idea is simple: reduce exposure when a bad sequence would hurt the most, then add risk back as your horizon shortens and liabilities are partially covered by guaranteed income. Their simulations showed better early‑retirement resilience versus static allocations, especially at moderate withdrawal rates.

And the bond math actually helps again right now. Real yields on safe bonds are meaningfully higher than they were for most of the 2010s. The 10‑year TIPS real yield topped ~2.5% in October 2023 and has hovered around ~2% for much of 2024-2025 (Treasury data). That makes a TIPS ladder to cover essential expenses a lot more attractive than it was five years ago. Liability‑matching the next 10-15 years of needs at positive real yields is a different ballgame.

How do you coordinate all this without making yourself crazy? A simple, slightly boring structure:

• Guaranteed income: Delay Social Security when the plan supports it; you’re buying more inflation‑linked lifetime cash flow.
• Cash bucket: 1-3 years of essentials (not “wants”), so you’re not selling stocks into a 20% drawdown.
• Bond tent: Heavier fixed income early. Use TIPS/short Treasuries at these real yields to cover near‑term liabilities.
• Rising equities: Gradually lift equity weight as you move past the red‑zone years.
• Dynamic withdrawals: Use guardrails, trim spending a bit when portfolios fall below your bands; give yourself raises after strong years. Small, rules‑based tweaks beat panic.

Yes, coordinating the timing can feel messy. I’ve mistimed a claim date with a client before and kicked myself. The fix wasn’t clever, it was a calendar, a glidepath policy, and an IPS that spells out “what we sell first” during selloffs. Guaranteed income + cash + bonds that actually yield + a rising equity path = fewer forced stock sales when markets are ugly. And less stress. Which frankly matters as much as the math.

Okay, markets stink, here’s what to do in the next 30 days

No panic. Just a checklist and a calendar. You’ll buy time now and build resilience for the next bear, because there’s always a next one.

1. Set spending guardrails, today. Cap this year’s raise. If you gave yourself +5% earlier this year, pause it. Define a withdrawal-rate band (example: 3.5%-4.5%). If your current withdrawal rate jumps above the top of your band after this drawdown, trim spending by 5-10% for the next 12 months. Small cuts now beat forced sales later. I’ve watched clients avoid selling into 2020 and 2022 swoons purely because they had this written down.
2. Fund a 2-3 year cash/short-term bond bucket. Park 24-36 months of essential outlays in a mix of high-yield savings, Treasury bills, and short Treasuries. Route all dividends and interest here automatically. Quick data point: in 2022 the S&P 500 fell about 19% and the Bloomberg U.S. Aggregate Bond Index dropped ~13% (calendar-year), so a classic 60/40 was down around the high-teens. I can’t remember if it was -16% or -17%; call it “painful.” A funded cash bucket meant no equity sales at those lows.
3. Turn on mechanical rebalancing. Use calendar + bands. Example: check quarterly and rebalance when any asset class is off target by the “5/25 rule” (±5 percentage points if the target is ≥20%, or ±25% of the target if it’s smaller). No gut-feel trades. Put the reminder in your phone; I literally use a boring first‑business‑day trigger.
4. Harvest losses, carefully. Realize capital losses to offset gains and up to $3,000 of ordinary income per year (per IRS rules), then carry forward the rest indefinitely. Avoid wash sales: no repurchasing the “substantially identical” security for 30 days before/after. Keep a simple journal (ticker, date, basis, replacement fund) so future‑you doesn’t guess.
5. Map a 2025 Roth conversion. Decide how much room you have in your chosen bracket (say you’re filling the 12% or 22% bracket before the TCJA sunsets in 2026). Pre‑65? Watch ACA marketplace subsidies. The Inflation Reduction Act extended enhanced credits through 2025, capping the benchmark Silver premium at about 8.5% of MAGI at the top end. Translation: an over‑zealous conversion can raise MAGI and hike premiums. Model it first.
6. Stress‑test your plan. Run a 2000-2002 sequence (roughly a ~49% peak‑to‑trough S&P 500 drawdown from 2000 to 2002) and a 2008-2009 hit (~57% peak‑to‑trough). Add a 2022‑style inflation shock (headline CPI peaked at 9.1% YoY in June 2022). Does your plan stay inside the guardrails without selling equities at bad prices? If not, tweak equity weight, cash bucket size, or spending flexibility.
7. Write or refresh your Investment Policy Statement (IPS). Put all of this in writing: target allocation, rebalancing bands and cadence, withdrawal bands, tax rules (loss harvesting, wash‑sale avoidance), cash bucket size, and the order of what you sell first in a selloff. Future‑you will be tempted to improvise. Don’t. The IPS is the adult in the room.

One last human note: I’ve been on a Monday morning call where everyone “felt” like selling, and the only reason we didn’t was a checklist like the one above. Not heroic, just process. You can do the same, 30 days, one step at a time.

Frequently Asked Questions

Q: How do I protect my withdrawals if a bear market hits right after I quit?

A: Keep 1-2 years of basic expenses in cash/T‑Bills, cap year‑one withdrawals at ~3-3.5%, and use a guardrails rule to cut raises (or trim spending) when markets drop. Delay big purchases, and consider a small bridge income. Boring beats brave when sequence risk shows up.

Q: What’s the difference between average return risk and sequence‑of‑returns risk for FIRE?

A: Average return risk is worrying the long‑run return is lower than you planned. Sequence risk is the bad timing problem: poor returns early in retirement force you to sell more shares when they’re cheapest, which permanently shrinks your base. 2022 was the case study, stocks fell roughly 25% peak‑to‑trough and core bonds lost about 13% (calendar‑year), so even 60/40 was down ~16-17%. If you needed the same $40k for living costs, you had to sell extra shares at depressed prices. Later, when markets recover, as they do, you’re compounding off a smaller pile, so the bounce doesn’t fully catch you up. That’s why the first 5-10 years matter way more than year 21. I’ve seen plans that “worked on average” fail in practice because year 1-3 were cruel.

Q: Is it better to use a fixed 4% rule or a guardrails approach during the first 5-10 years?

A: If you want simplicity, a fixed 4% (inflation‑adjusted) can work, but it’s brittle in bad early markets. Guardrails (think Guyton‑Klinger style) are more forgiving: start at, say, 3.5-4.0%, give yourself a yearly raise only if the portfolio stays inside bands (e.g., 20% up band, 20% down band), and cut 5-10% from withdrawals when you breach the lower rail. Add “no raise” rules after negative years and skip inflation adjustments when CPI is high and returns are poor. My take in the fragile first decade: flexible beats fixed. You’re buying survival odds with small, temporary lifestyle tweaks. I know it’s not as clean as a single percentage, but it’s the difference between a speed bump and a blow‑out when markets wobble.

Q: Should I worry about bonds failing me like 2022, and how do I build a withdrawal buffer that actually holds up?

A: Short answer: yes, respect that 2022 can happen again; build for it. Longer answer with a workable setup: 1) Segment time. Park 2-3 years of core expenses in cash/T‑Bills/CDs. Example: spending $48k? Hold $96k-$144k in a ladder of 3-12 month T‑Bills and 1-2 year Treasuries. That’s your paycheck, regardless of headlines. 2) Make bonds sturdier. Favor short‑term Treasuries and TIPS over long‑duration. A 50/35/15 mix (global stocks/short Treasuries & TIPS/cash) is dull, but dull keeps you retired. 3) Refill rules. After up years, peel gains from equities to top up the cash bucket back to 2-3 years. After down years, skip refills; let the bucket draw down and trim spending 5-10% if it nears 12 months. 4) Floor part of the budget. Cover essentials with Social Security (delay to 70 if you can, use the cash bucket to bridge), a small SPIA, or a TIPS ladder for the first 7-10 years. 5) Taxes matter. In early retirement years with low income, harvest 0% capital gains, do partial Roth conversions, and withdraw tax‑smart (taxable → IRA → Roth) to extend portfolio life. Quick reality check: in 2022 both stocks and core bonds fell together. Short duration, TIPS, and cash cushioned the hit and kept people from selling stocks at the worst time. That’s the job, buy time so compounding can heal the portfolio.

@article{how-a-bear-market-affects-fire-withdrawals-and-timing,
    title   = {How a Bear Market Affects FIRE Withdrawals and Timing},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/bear-market-fire-withdrawals/}
}