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Flexible spending rules cut your discretionary expenses in a year that follows weak investment performance. CoastMath measures the performance of your own portfolio over completed years, finds the reduction your thresholds call for, and applies it to the discretionary part of every expense, never below the spending floor. Essential spending and all other outflows are paid in full.
A reduction lasts one year. Each year is measured again, and spending returns to its full planned amount as soon as performance is back above your first threshold. Nothing cut is made up later.
Two opt-in settings extend the rules. Upside points raise discretionary spending when the portfolio finishes above its earlier high, and Unallocated cash at year end can count cash your saving rules left over as extra discretionary spending. You can also choose which kinds of spending the multiplier applies to. With none of these set, the rules behave exactly as described in the first two paragraphs.
By default, only the discretionary part of expenses paid from general cash flow: all of a Discretionary expense, or the share set by a Custom split. A $10,000 expense that is 40% discretionary keeps its $6,000 essential part; a 20% reduction cuts $800 from the other $4,000. These are never reduced:
- essential expenses, and the essential part of a custom split
- expenses funded from specific accounts, and payroll deductions
- health coverage, loan payments, charitable gifts and taxes
The rules apply from the year the start milestone is reached until the year the end milestone is reached, or for the whole plan if neither is set. Categories are set on each expense; see Recurring and one-time expenses.
Under Apply flex rules to you can add two more kinds of spending. Each year the multiplier is applied in a fixed order:
- Ordinary expenses (selected by default): the discretionary part of each expense, as above.
- Withdrawal-strategy spending: the amount a Withdrawal strategies rule sets for the year. The rule’s minimum and maximum still bound the result, and a reduction never takes spending below your planned essential expenses. Expenses the rule leaves running are handled as in the first step.
- Leftover spending: the cash counted as spending under Unallocated cash at year end, described below.
Every run uses this order: the main projection, each Success odds trial and each stress-test period.
Each year’s return is the growth of your investment accounts taken together, before that year’s deposits and withdrawals, so saving and spending don’t count as gains or losses. Checking and savings balances are excluded. The year being spent is never included: the measure uses completed years only.
Trailing return compounds the last one to five completed years, set by Trailing lookback period (years):
Trailing return=(1 + return₁)×…×(1 + returnₙ)−1
Drawdown from all-time high chains every completed year’s return into an index that starts at 1 in the plan’s first year, and compares the latest value with the highest the index has reached:
Drawdown=Index after the last completed year÷Highest index so far−1
Until enough years have completed (one for the drawdown measure, the lookback length for trailing return), no reduction applies. The high-water mark is set within the projection, not by market history before your plan starts.
Each threshold pairs a performance level with a reduction that applies when performance falls below it. With more than one threshold:
- Step uses the reduction of the deepest threshold crossed.
- Linear scales the reduction in proportion to where performance falls between two adjacent thresholds.
- Beyond the deepest threshold, its reduction applies in both modes; above the shallowest, there is none.
Share kept=the larger of(1 − reduction)andSpending floor
The floor is a share of each expense’s own planned discretionary amount, not of total spending.
- Step
- Linear
Rules: at −10%, reduce 10%; at −20%, reduce 30%. The 75% floor overrides the 30% reduction. Plotted at whole percents.
Show data
| Drawdown (%) | Kept, step | Kept, linear |
|---|---|---|
| −30 | 75% | 75% |
| −29 | 75% | 75% |
| −28 | 75% | 75% |
| −27 | 75% | 75% |
| −26 | 75% | 75% |
| −25 | 75% | 75% |
| −24 | 75% | 75% |
| −23 | 75% | 75% |
| −22 | 75% | 75% |
| −21 | 75% | 75% |
| −20 | 75% | 75% |
| −19 | 90% | 75% |
| −18 | 90% | 75% |
| −17 | 90% | 76% |
| −16 | 90% | 78% |
| −15 | 90% | 80% |
| −14 | 90% | 82% |
| −13 | 90% | 84% |
| −12 | 90% | 86% |
| −11 | 90% | 88% |
| −10 | 90% | 90% |
| −9 | 100% | 100% |
| −8 | 100% | 100% |
| −7 | 100% | 100% |
| −6 | 100% | 100% |
| −5 | 100% | 100% |
| −4 | 100% | 100% |
| −3 | 100% | 100% |
| −2 | 100% | 100% |
| −1 | 100% | 100% |
| 0 | 100% | 100% |
Upside points are available with the drawdown measure. Each point pairs a gain with an increase: when the portfolio finishes above its earlier high by at least that gain, discretionary spending rises by that increase. They sit beside your reduction thresholds and do not change them.
The comparison is against the high reached before the latest completed year, so a year that sets a new high counts as a gain over the old one:
Gain over the earlier high=Index after the last completed year÷Highest index before that year−1
- The neutral point is zero. At or below the earlier high there is no increase, so spending is never raised while the portfolio is recovering to a previous peak.
- Step uses the increase of the highest point the gain has reached. Linear rises from no increase at a zero gain to the first point’s increase, then scales between adjacent points. Above the last point, its increase holds in both modes.
- The year being spent is never included, and deposits and withdrawals do not move the index, exactly as for reductions.
- Each point is a gain above 0% and up to 1,000%, with an increase from 0% to 200%. Thresholds can’t repeat, and you can set up to ten points.
| Index after 2026 (+10%)The earlier high | 1.1000 | |
|---|---|---|
| → | Index after 2027 (+12%) | 1.2320 |
| = | Gain over the earlier high | 12.0% |
| → | Increase, linear between 5% → 10% and 20% → 30%10% + (7 ÷ 15) × (30% − 10%) | 19.3% |
| Travel as planned | $20,000 | |
| × | Share spent | 119.3% |
| = | Travel in 2028 | $23,867 |
Housing stays at $40,000. In 2027 the gain over the starting level of 1.0 was 10%, so travel was $23,333. With a 0% return in 2028, the index is level with its high in 2029 and travel is back to $20,000.
Any increase is listed separately from reductions in each year’s results, so a year shows one or the other.
By default, cash your saving rules don’t allocate in a year is deposited to the account that catches the remainder. Choosing Spend it as extra discretionary spending counts that cash as spending instead. It appears as “Leftover spending” in the year’s cash flow and in the spending totals, and it earns no growth because it never reaches an account.
- Only the year’s own residual is spent. That is income and other inflows after taxes, expenses, loan payments and every saving rule you have funded. A rule with a cap is funded to its cap first.
- Existing balances are never touched. Nothing is withdrawn to create leftover, and account balances you already hold, including accounts with a withdrawal lock, are not spent.
- A year with no residual spends nothing. If bills exceed income there is no leftover, and the shortfall is handled by withdrawals as usual. Leftover is never created by borrowing against the plan.
- A part-year start spends only the residual of the months simulated.
The leftover is held as cash until the year’s taxes are settled, and it is spent last. A refund for the year is added to the held cash and spent once, with the rest. A bill for the year is paid from the held cash before anything is spent, and only a bill larger than the held cash is withdrawn. If you set a delay in tax settlement, a refund or bill for a year arrives in the later year as ordinary cash and is treated like that year’s other cash flow, so it can be spent or can reduce what is spent in that year.
| Salary | $90,000 | |
|---|---|---|
| − | Income tax at a flat 20% | $18,000 |
| − | Housing | $40,000 |
| − | Saved by the rule, capped at | $10,000 |
| = | Leftover spendingThe year’s spending is $62,000; net worth rises only by the $10,000 saved | $22,000 |
With Leftover spending selected under Apply flex rules to, the multiplier scales the leftover: at 70%, 70% of it is spent and the remaining 30% is saved as usual. A multiplier above 100% never spends more than is available, so the whole leftover is spent and nothing more.
A portfolio returns +12%, −15% and +4% in 2026–2028. The rules use the drawdown measure with the thresholds in the chart above, linear interpolation and a 75% floor. Travel is a $20,000 discretionary expense; housing is a $40,000 essential one.
| Index after 2026The all-time high | 1.1200 | |
|---|---|---|
| → | Index after 20281.12 × 0.85 × 1.04 | 0.9901 |
| = | Drawdown | −11.6% |
| → | Reduction, linear between −10% and −20%10% + (1.6 ÷ 10) × (30% − 10%) | 13.2% |
| Travel as planned | $20,000 | |
| × | Share kept | 86.8% |
| = | Travel in 2029 | $17,360 |
Housing stays at $40,000. In 2028 the drawdown after 2027 alone was −15%, so travel was $16,000 (a 20% cut). With returns of 5% from 2029, travel is back to $20,000 in 2030.
Reduced expenses appear at their reduced amounts in the year’s cash flow. With a fixed return assumption, every projected year has the same return, so a rule either never fires or fires every year once the lookback fills. The rules matter most in runs where returns vary: each path in Success odds and each period in Historical stress test applies them to its own returns.