Skip to content Skip to navigation

The Floor-Leverage Rule for Retirement

Dec 2013
Working Paper
13-013
By  Jason Scott, John Watson
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.