Strategy in short: Hold SPY if SPY beat T-bills in at least five of the past 12 completed months. Otherwise, hold T-bills.
Retirement answer: The rule supported more starting spending: 5.9% versus 3.3% a year funded 30 years in at least 95% of both sets of histories. These are historical thresholds, not recommended spending.
Return comparison: In this 32-year backtest, $10,000 grew to $518,682 with the rule and $275,308 while always holding SPY.
The rule protected capital during parts of the 2000–03 technology bust and the 2008–09 financial crisis, then returned a larger balance to SPY. It missed gains in early 2002 and early 2003, but the declines it avoided were larger. The deepest fall was about 24% with the rule, compared with about 51% while always holding SPY.
See when the strategy helped—and when it hurt
The strategy moved out of SPY for 29 months. During those months, SPY fell 45% while T-bills gained 5.4%. This is where the extra return came from.
SPY fell in 18 of those 29 months. Those down months compounded to a 64% loss. SPY rose in the other 11 months, compounding to a 54% gain. The long falling stretches outweighed the rebounds the strategy missed.
What was happening?
2000–03 · Technology bust
The internet boom reversed into a long market decline.
Investors had poured money into technology companies and infrastructure. When earnings slowed and excess capacity became obvious, financing dried up and many companies failed. The weakness spread beyond technology and the broader U.S. market kept falling through several attempted recoveries. The San Francisco Fed described the reversal as it unfolded.
What it felt like: SPY repeatedly looked ready to recover, then weakened again. The rule moved to T-bills four times, avoiding parts of the decline and missing two rebounds.
2008–09 · Financial crisis
A housing crash spread through banks, lending and jobs.
Mortgage losses damaged financial institutions and made credit harder to obtain. By autumn 2008, failures and frozen markets had turned a housing downturn into a deep recession. The Federal Reserve's history explains how the crisis spread.
What it felt like: Investments, home values and the job market were all under pressure. The rule stayed in T-bills from October 2008 through March 2009, while SPY lost 30.4%.
Could this happen again?
Yes. Another long decline is a real risk during a 30-year FIRE life.
Two crisis periods cannot give us an honest probability. They do show the kind of market this rule helped with: weakness that lasted long enough to repeat across months.
The next decline could have a different cause and shape. This rule needs time to react, so it is better suited to a long slide than a fast fall followed by a fast recovery. It stayed in SPY throughout both the 2020 crash and the 2022 decline.
The strategy beat SPYThe strategy lost to SPY
Growth of $10,000 — logarithmic scale
This graph uses a logarithmic scale: the same percentage change takes up the same vertical space. Each shaded band is a period spent in T-bills. Its label shows how much the rule gained or lost against SPY during that exit. Ten extra switches reduced the final advantage by about 1.0%.
What happened each time the strategy held T-bills
What happened each time the strategy held T-bills
Time in T-bills
T-bills
SPY
Effect
December 2000–December 2001
+4.0%
-12.2%
Protected
February–March 2002
+0.3%
+1.5%
Missed gain
May–August 2002
+0.6%
-14.6%
Protected
January–April 2003
+0.4%
+4.6%
Missed gain
October 2008–March 2009
+0.1%
-30.4%
Protected
The table counts only months spent in T-bills. Both portfolios held SPY during every other month.
Did the rule add anything after the financial crisis?
No. From April 2009 through June 2026, the rule stayed in SPY every month. Both $10,000 portfolios ended at $127,800.
Both portfolios earned 15.9% a year and suffered the same 23.9% deepest fall. The rule made no defensive move during either the fast 2020 crash or the 2022 decline.
The full historical advantage came from the earlier exits. This makes the result easier to explain, but less certain: we have only two distinct crisis environments in which the rule helped.
Return-consistency13.0% a year-24.2% deepest fall
Always SPY10.8% a year-50.8% deepest fall
February 1994–June 2026. This is a hypothetical backtest, not an account someone actually held. Past results do not predict future results. Untick either line to view the other without changing the scale.
Can it support taking out money every month?
It did much better than holding SPY in these tests. The rule cut the deepest fall from about 51% to 24%, leaving more of the portfolio available while withdrawals continued.
It helped by holding T-bills during parts of two long declines. It hurt when SPY rose during 11 of its 29 months in T-bills. The gains it missed were smaller than the losses it avoided.
Example: You have $500,000 and need $2,500 a month—6% a year.
Before either fall$500,000$2,500 a month starts at 6.0% a year.
After the rule's deepest fall$378,800 left
7.9% a yearThe same spending
After SPY's deepest fall$246,012 left
12.2% a yearThe same spending
Each line applies that portfolio's own deepest tested fall to the same $500,000 starting value, before counting withdrawals. The longer line means more capital remained for the recovery.
The rule's smaller deepest fall left about $132,788 more in this illustration. The same spending then consumed 7.9% of the rule's portfolio each year, compared with 12.2% after SPY's deepest fall.
How much spending survived at least 95% of both history tests?
For a 30-year retirement, the highest starting withdrawal rate was 5.9% with the rule and 3.3% while always holding SPY. On a $500,000 portfolio, the rule supported $1,083 more starting spending each month in these tests.
Return-consistency · 5.9% a year$2,458 a month389 of 389 ordered starts · 4,770 of 5,000 mixed historiesAlways SPY · 3.3% a year$1,375 a month389 of 389 ordered starts · 4,794 of 5,000 mixed histories
At the same 3.3% starting rate, both portfolios funded all 389 ordered starts. The rule funded 5,000 of 5,000 mixed histories, compared with 4,794 for SPY.
The 5.9% figure is unusually high because every test reuses the same strong 32-year U.S. market record. It is a historical threshold, not a safe withdrawal recommendation or a promise of future success.
Test if the return-consistency strategy can fund your early retirement
Enter your portfolio, monthly spending, and how long the money needs to last.
$2,500 a month for 30 years starts at 6.0% of the portfolio each year.
Return-consistency funded this early retirement in at least 9 out of 10 histories tested. Always SPY did not.
389 starting months; the fund's record repeats in order when needed
Return-consistency
388 funded
Always SPY
332 funded
5,000 histories built from 8–12-year pieces
Return-consistency
4,735 funded
Always SPY
3,193 funded
A path funded the goal only if it paid every inflation-adjusted monthly withdrawal for 30 years. Results use the nearest 0.1 percentage-point starting withdrawal rate. They reuse one 32-year market record and are not a probability about your future.
How the FIRE calculator works
The calculator applies the portfolio value, monthly withdrawal, and number of years you enter. The first withdrawal occurs before the first month's return, and later withdrawals rise with U.S. inflation. A history counts as funded only if it pays every monthly withdrawal for the full period and finishes above zero.
One result begins at each of the 389 months in the fund record and follows that record forward in order, returning to its first month when more months are needed. The other builds 5,000 longer histories from linked 8-, 10-, and 12-year pieces of the same record. The calculation charges 0.10% whenever SPY is bought or sold and excludes personal tax.
When a simulated history jumps to another historical period, the rule uses the 12 real months that preceded the incoming month. The retirement account and its withdrawals continue without resetting.
Strategy in detail
At the end of every month, the rule compares SPY with T-bills during each of the previous 12 completed months. If SPY beat T-bills in at least five of them, the portfolio holds SPY for the next month. Otherwise, it holds T-bills.
The theory is that market direction can persist for months. The 2012 Time Series Momentum study found that recent direction tended to persist for one to 12 months across 58 equity-index, bond, currency and commodity futures. A later study of 67 markets back to 1880 found that simple trend following remained profitable on average across very different periods.
In this test, the signal marked periods with a greater risk of deep losses. It protected best during slow declines, when a monthly rule had time to move into T-bills. That matters during retirement because long, deep drawdowns caused most FIRE-plan failures across the otherwise successful strategies tested for this site. Sharp falls followed by fast recoveries were less damaging because the portfolio recovered sooner.
Can I trust these results?
My evidence-weighted estimate is about a 55% chance that this exact rule would improve a long retirement compared with always holding SPY.
Here, success means funding at least as many planned withdrawals while reducing the deepest fall. The 55% is my judgment after weighing the evidence, not a measured probability or a promise about the future.
The result earns more than an even chance because the rule grew more, fell less, helped during two very different long crises, used only information available at the time, and remained ahead after distributions and trading costs.
Confidence stays modest because every bit of historical advantage came from two crisis periods. The rule made no defensive move after March 2009. The retirement tests also reuse the same 32 years, exclude personal tax and compare the rule only with holding SPY.
Worth comparing with a simple SPY portfolio. Not strong enough to rely on as a stand-alone retirement plan.
Methodology details for the nerds
How I ran the return comparison
The graph starts with $10,000 in February 1994 and follows all 389 months through June 2026 in their original order. The comparison holds SPY throughout. The rule holds SPY for 360 months and T-bills for 29 months. Distributions are reinvested. I subtract 0.10% whenever SPY is bought or sold. The graph includes no withdrawals, inflation adjustment or personal tax.
The first decision uses February 1993 through January 1994. Those earlier months supply the signal only; they add no return to the portfolio. Every later decision uses only the 12 months that had already finished.
These are simulations made by reusing one 32-year U.S. record, not thousands of independent forecasts. A 100-year path may contain the same historical period more than once. The test does not include every tax system, broker cost, account type, country or future market environment. It is educational research, not personal investment advice or a live allocation signal.
FINRA's investor guide to backtested strategies explains the central limit: historical simulations can help compare rules, but they cannot tell us how a strategy will perform in the future or fully reproduce real investing.
What evidence would change the conclusion?
The most useful evidence would be a later period the rule had never been tested on, especially another long decline. A result that survived different trading costs, personal tax and several distinct crises would raise confidence. A future long decline in which the rule stayed invested or repeatedly missed rebounds would lower it.
See how much you need to retire—and compare what to invest in.
Enter what you have and what you want to spend each month. Compare three portfolios against the same market history. Your financial figures stay in your browser.
