Retirement in the DRIVER’S SEAT Use Dynamic Spending to KEEP CONTROL
Executive Summary
You can enjoy your retirement while protecting your savings: it doesn’t have to be a tradeoff! Dynamic spending lets you adjust your withdrawals to live with intention, balancing life’s priorities without compromising financial stability.

Want to watch an in-depth exploration of this topic? Check out this video on my YouTube channel, @savvysteward: Retirement in the DRIVER’S SEAT Use Dynamic Spending to KEEP CONTROL
Retirement in the Driver’s Seat: Use Dynamic Spending to Keep Control
Retirement is more than a milestone—it’s the time to enjoy the life you’ve worked so hard to build. But even the best-laid plans can face unexpected detours. Markets shift, expenses pop up, and health needs change. So, how do you stay in control of your financial future without letting the uncertainties derail your goals?
That’s where dynamic spending comes in. It’s a strategy designed to adapt with you, letting you adjust your withdrawals based on your portfolio’s performance and your evolving needs. With dynamic spending, you’re not just coasting through retirement—you’re in the driver’s seat, making choices that balance enjoying today and protecting tomorrow.
What is dynamic spending, and how does it work?
Dynamic spending is a flexible method that allows you to adjust your budget based on your portfolio’s performance and personal needs. It’s kind of like driving in different conditions. On smooth roads, you can speed up, but when conditions get rough, you ease off the gas. This adaptability helps you balance enjoying today while ensuring your savings last for tomorrow.
How does dynamic spending differ from a fixed spending approach?
Fixed spending sets a withdrawal rate that doesn’t change, even when market conditions do. It’s a simple, more hands-off approach, but it can be risky during downturns. Dynamic spending, by contrast, adjusts withdrawals based on market performance or personal circumstances. This proactive method minimizes the risk of depleting your savings too quickly while providing the flexibility to maintain your lifestyle.
What are the tax advantages of dynamic spending?
Dynamic spending allows you to strategically choose where withdrawals come from—taxable, tax-deferred, or tax-free accounts—to manage your tax liability. For example, withdrawing from tax-deferred accounts during strong market years can help balance gains, and in down markets, focusing on taxable accounts may allow you to offset losses and reduce taxable income. This adaptability can save money and extend the life of your portfolio.
How does dynamic spending address healthcare costs in retirement?
Healthcare expenses almost always increase with age. Dynamic spending allows you to prioritize these costs without sacrificing other goals. Small adjustments in discretionary spending such as travel or dining out, can help cover higher medical bills. Pairing this strategy with a Health Savings Account (HSA) provides an additional tax-advantaged resource for medical expenses, making it easier to manage rising costs.
Can dynamic spending reduce emotional decision-making?
Market volatility can lead to emotional reactions, like panic selling. Dynamic spending offers a pre-planned framework, so you’re less likely to make rash decisions during downturns. Instead of reacting impulsively, you can adjust spending slightly, knowing your strategy accounts for market ups and downs. This approach provides peace of mind and keeps you focused on long-term success.
What role does dynamic spending play in semi-retirement?
For semi-retirees, dynamic spending bridges the gap between part-time income and retirement savings. For example, if you earn enough to cover most of your expenses, you can reduce withdrawals, allowing your portfolio to grow. Conversely, if you take a break from work or reduce hours, dynamic spending lets you adjust withdrawals temporarily without disrupting your financial stability.
How does dynamic spending help mitigate sequence of returns risk?
Sequence of returns risk can have a huge impact on your portfolio when market downturns occur early in retirement. Dynamic spending mitigates this risk by reducing withdrawals during those critical periods, giving your portfolio time to recover. For instance, cutting withdrawals in a down market preserves more capital for future growth, protecting your long-term financial security.
What tools or strategies can support dynamic spending?
A Spending Withdrawal Policy Statement is a valuable tool in dynamic spending. It outlines how and when to adjust withdrawals, ensuring consistency and discipline. Working with a financial advisor adds another layer of support, helping you navigate tax implications, market volatility, and personal financial changes. Regular reviews ensure your plan evolves with your circumstances, keeping you on track to meet your goals.
Contact Information
Keith Demetriades, CFP®, CKA®, is dedicated to helping individuals, families, and organizations integrate faith-based principles into their financial planning. Oikonomia is a foundational concept in his practice, reflecting his commitment to ethical and values-driven financial management.
Keith welcomes conversations about the topics discussed in this piece and is available to assist in creating a financial plan that aligns with your faith and values. For more information or to start a conversation about your financial future, contact Keith Demetriades at (806) 223-1105 or visit his website at https://www.kingsview.com/advisor/keith-demetriades/.
Disclaimer: The information provided in this blog is for educational purposes only and should not be considered financial advice. Please consult a qualified financial advisor to discuss your specific situation and needs. Past performance does not indicate future results, and all investments carry risks, including potential loss of principal. Any financial product or strategy references are purely illustrative and should not be construed as endorsements or recommendations.