The Floor-Leverage Rule for Retirement
The Floor-Leverage Rule is a spending and investment strategy designed for retirees that can tolerate investment risk, but insist on
sustainable spending. The rule calls for purchasing a spending guarantee with 85% of wealth and investing the remaining 15% in
equities with 3x leverage. Surprisingly, this leverage is a tool for managing risk. We compare our rule to some popular strategies,
illustrate it for a variety of retiree preferences, and evaluate its historical performance.