This strategy was originally proposed with somewhat different rules.

1. Calculate your default withdrawal amount as, say, 5% of portfolio value in Year 1.

2. In Years 2 and on, adjust the dollar amount by inflation, and recalculate what percentage this would be of the then-current portfolio value.

3. If the new actual percentage is 20% above your target, i.e., 6% in our example, reduce the dollar amount by 10% (e.g., if the new percentage is 6.66%, you'd actually draw 6%; if the new percentage is 7%, you'd draw 6.3%; etc.).

4. If the new actual percentage is 20% below your target, i.e., 4% in our example, increase the dollar amount by 10% (e.g., if the new percentage is 3.5%, you'd actually draw 3.85%; if the new percentage is 3%, you'd draw 3.3%; etc.).

5. Rinse and repeat each year.

The inventors of this method also propose stopping the modification after 15 years in retirement, figuring that you've already addressed the sequence-of-returns risk because you're no longer early in your retirement.