Summary
Withdrawal is increased in line with CPI minus a certain percentage.
This strategy moderates the effect of inflation on withdrawal amounts.
Description
The inflation minus X% adjustment strategy dictates that the withdrawal amount is increased each year in line with the Consumer Price Index (CPI), minus a certain percentage chosen by the user (ranging from 1% to 5%). This essentially softens the impact of inflation on the withdrawal amounts and provides some control over how rapidly withdrawals can increase.
Example
If you start with a withdrawal of £60,000 and choose 1% as your X%, and the CPI for the next year is 3%, your withdrawal would increase by 2% (3% - 1%), making your next withdrawal £61,200 (£60,000 * 1.02). This continues each year with the same calculation, helping to moderate the effect of inflation.