Musicians often pay tribute to classic songs in many ways. Ray Charles ended up in the Country Music Hall of Fame with his “Modern Sounds in Country and Western Music.” Linda Ronstadt had a career covering someone else’s song; when you can sing like she could no one complained. With the advent of music videos, reinterpretations like Dwight Yoakum’s version of “Close Up the Honky Tonks” get a new life.

The financial world has concepts that stand the proverbial test of time, but can be reinterpreted and often improved. Back before Google searches and modern computers, Bill Bengen painstaking researched data to determine a maximum portfolio withdrawal rate a retiree could use and not run out of money. Bengen dubbed it SAFEMAX, and the industry called it the 4 percent rule. Simply put, a 4 percent inflation-adjusted withdrawal rate has never exhausted a portfolio of any rolling 30 year period from 1926. Later research showed by adding asset classes (small company and international stocks) to Bengen’s original mix (S&P 500 and 5-year US Treasury notes) boosted the rate slightly higher.

Bengen’s work excluded the drag of taxes and investment costs, too. Since most retirement assets come from tax-deferred accounts, Uncle Sam gets his cut. Fees either from a mutual fund or an advisor often run from 1 to over 2 percent. This double whammy is often ignored when evaluating portfolio distributions.

An interesting concept has popped up as more boomers retire. The 4 percent rule does not necessarily mean the optimal withdrawal rate. In many cases, a strict adherence means spending too little. Retirement doesn’t have any mulligans; you don’t get a do-over. While life can throw financial curveballs you can’t reach, the reality is many retirees spend more money early in retirement versus later. As the adage says, there are no Brinks trucks in funeral processions. It is a delicate balance, but a good problem to have.

One strategy that ties in with how people react is simply reducing withdrawal amounts when portfolios lose value. Of course, not everyone has the luxury of reducing their spending. For example, a surviving spouse can lose up to 50 percent of Social Security household income and can’t cut back. Some pensions have no survivor benefits, too. An underappreciated financial skill is tracking spending; most people can’t, don’t or won’t do it.

Retirees can access home equity through a home-equity conversion mortgage line of credit (HECM-LOC). Don’t do this at home or by yourself, but the concept is pretty simple. Start with a higher withdrawal rate than SAFEMAX. When portfolios have poor returns, use the line of credit for next year’s spending. A home equity line of credit can be abused and is expensive, but with prudent use, early studies show they can be an effective way to spend optimally during retirement.

You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.