$2,500 a month starts at 6% a year.
Can a signal-paused cash pot make SPY withdrawals safer?
Strategy in short: Start without a pot. When SPY beat T-bills in at least 5 of the past 12 months, sell up to 0.5% of the opening portfolio each month to build at most 12 months of spending in T-bills. Pause scheduled sales otherwise.
Retirement answer: SPY with a signal-paused cash pot supported more starting spending than Always SPY: 3.4% 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: Always SPY finished with more money after the same monthly withdrawals. SPY with a signal-paused cash pot ended with $3,198,871 and Always SPY with $3,466,763.
$500,000 with $2,500 monthly withdrawals
Both paths paid the same inflation-adjusted spending. The chart shows how the rule changed the money left behind.
See when the strategy built and spent its cash pot
The strategy builds cash only while SPY's recent monthly record is stronger. During weak periods, it spends the pot and pauses voluntary refills.
The strategy held between 94% and 100% in the risky asset while paying the same monthly withdrawals.
During the lower-exposure months, SPY rose in 237 months and fell in 124 months. That is where the rule either gave up gains or avoided losses.
SPY with a signal-paused cash pot$3,198,871-60.1% deepest fall
Always SPY$3,466,763-61.3% deepest fall
February 1994 through June 2026. Distributions are reinvested. The calculation charges 0.10% of each risky asset bought or sold. Monthly spending starts at $2,500 and rises with inflation. Past results do not predict future results.
Did the spending pot make monthly withdrawals safer?
At the comparison's hardest point, SPY with a signal-paused cash pot left $515,957 and Always SPY left $508,301 after the same withdrawals.
The strategy left $7,656 more invested. That made the same spending a smaller burden while the portfolio recovered.
Example: You have $500,000 and need $2,500 a month—6% a year.
The same spending then equaled 8.4% a year.
The same spending then equaled 8.6% a year.
What funded at least 95% of both history tests?
SPY with a signal-paused cash pot supported a 3.4% starting annual withdrawal for 30 years: 389 ordered starts and 4,750 of 5,000 mixed histories funded every withdrawal.
These are historical thresholds, not recommended spending amounts or a promise of future success.
Test if SPY with a signal-paused cash pot can fund your early retirement with your own numbers
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.
In these backtests, sometimes. Neither strategy funded this early retirement in at least 8 out of 10 histories tested.
389 starting months; the fund's record repeats in order when needed
- SPY with a signal-paused cash pot
- 332 funded
- Always SPY
- 332 funded
5,000 histories built from 8–12-year pieces
- SPY with a signal-paused cash pot
- 3,172 funded
- Always SPY
- 3,170 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.
At every repeated or rearranged join, market signals use the real observations that preceded the incoming historical month. Portfolio value, withdrawals, inflation and strategy state continue without resetting.
Strategy in detail
Start without a pot. When SPY beat T-bills in at least 5 of the past 12 months, sell up to 0.5% of the opening portfolio each month to build at most 12 months of spending in T-bills. Pause scheduled sales otherwise.
The rule tries to raise cash during healthier markets and avoid planned selling during persistent weakness. Starting with no pot leaves the first decline unprotected.
Can I trust these results?
My evidence-weighted estimate is about 52% that the main effect would persist in a new long market period. That makes the result plausible, not dependable enough to treat as a promise.
The direct test covers February 1994 through June 2026. It includes fund distributions, T-bill returns, inflation and the stated trading costs, but it is still one U.S. market record. The longer retirement histories repeat it or link 8–12-year pieces; they test difficult orders, not new historical evidence.
Treat the result as evidence about how the rule behaved, then compare it with simpler alternatives and your own ability to follow it through a bad period.
Methodology details for the nerds
How I ran the return comparison
The test starts with the amount shown on the graph. Each decision uses only information already complete at that month-end. Distributions are reinvested, T-bills earn the published three-month rate, and the calculation charges 0.10% of each risky asset bought or sold.
How I tested retirement withdrawals
The first withdrawal occurs before the first month's return. Spending then rises with U.S. inflation. One panel checks every starting month in order; the other links 5,000 histories from 8-, 10-, and 12-year pieces. A path counts only if it pays every withdrawal and remains above zero.
Data and important limits
The calculation uses adjusted fund returns plus U.S. government T-bill and inflation data. Personal tax, spreads beyond the stated cost, and investor behavior are not included. A real fund can differ from its index because of fees and tracking.
Keep comparing
See where this strategy ranks.
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