Why The First 5 Years Matter
Imagine retiring in 2000 or 2008. The market crashed 40-50%. If you were following the 4% Rule, you had to sell twice as many shares to get your cash. By the time the market recovered, you had depleted half your share count.
You ran out of money by age 75.
Constructing the Shield
You don't need your whole portfolio to be high yield. You just need enough to cover the gap.
Example: The $1M Portfolio
- Expenses: $50,000 / year.
- Shield Target: 5 Years = $250,000.
- Allocation: Put $250k into a "Yield Bucket" (JEPI/SPYI/BDCs) yielding 10% ($25k/yr).
- Cash Buffer: Keep 2 years in cash/Treasuries ($100k).
- Growth Bucket: Leave the rest ($650k) in VOO/SCHD.
How It Works in a Crash
Year 1 (Market Crashes -20%):
You spend your dividends ($25k) + Cash Buffer ($25k).
Shares Sold: ZERO.
Year 2 (Market stays flat):
You spend dividends + Cash.
Shares Sold: ZERO.
By Year 4, the market usually recovers. Your Growth Bucket (VOO) is back to all-time highs, and you still own 100% of your shares.