# Building your plan step by step Sixty-eight chapters supplied the materials. This one is the build. It lays out the full sequence that turns them into a plan with numbers in it, tested, written down and ready to run. A plan that does not live on one page does not exist ([[choosing-your-strategy]]: without that page you have an intention, not a strategy). There are seven steps, and their order is not up for debate. The numbers before the target, the target before the portfolio, the portfolio before the rule, and all of it before you write anything down. Each step points to the chapter that covers it in full; this one is the parts list and the thread. Budget two to four evenings for a first pass, one of them entirely for step 6, the writing, the step everyone skips and the one that actually makes the plan. The final product is in a callout below: the template for the one-page plan, the document you, your spouse and your 2043 self should be able to read in five minutes. The chapter closes on day one. A validated plan gets **run**, through the transfers, the orders and the automation that move it off the page and into your life. ::: cle The rule of the build Every step ends in one decision, written down with a one-line reason. No going back until the full pass is done. Perfectionism that loops on itself is the most comfortable way never to leave ([[one-more-year]]). A complete, imperfect v1 beats six months of a polished v0.4. The annual review is there to sharpen it ([[the-annual-review]]). ::: ## Step 1: the numbers of your life (one evening, the most important one) It starts with three numbers you audit rather than estimate ([[how-much-you-need]]). **Spending** first: twenty-four months of statements, lumpy items annualized, health coverage added at full cost. Split it into a floor you have tested (the five-year test, better still the trial quarter, [[flexibility-in-practice]]) and the comfort level you are aiming at. Then your **pension**: Social Security or an employer plan, the statement rerun with no further earnings, marked down 10 to 20% for the risk that the promise moves, with the amount and the start date written down. Then the **horizon**: the 90th percentile for the last survivor, plus two to four years for the socioeconomic gradient ([[horizon-and-life-expectancy]]). Last comes the inventory: what you own, listed account by account, the near-certain side income marked down ([[real-estate-in-retirement]], [[pensions-and-other-income]]), and an estimate of your blended effective tax rate. ## Step 2: the target and the date (one hour) Pick the multiple ([[how-much-you-need]]): 25x to 33x, depending on the horizon, on what the market costs today ([[valuations-and-cape]]) and on the margins you carry. The target follows, and so does the date, projected at your current savings rate. Write the departure criteria right away, while calm, with the anti-goalposts clause and the date-or-condition commitment ([[one-more-year]]). They hold best when you set them years ahead, while nothing is at stake. ## Step 3: the portfolio (one evening) The method behind it, designing around risks rather than around assets, is in [[designing-a-portfolio]]. Here we follow the order the book used. The **equity share** first, set by the two tests: a drawdown you can live through, and a floor that stays covered. The plateau forgives a lot of imprecision ([[stock-bond-allocation]]). Then the **contents**: cap-weighted world equity, with any tilts written down ([[international-diversification]], [[factors-in-retirement]]), and a defensive sleeve drawn from the table of regimes (intermediate nominals, linkers, a dose of gold, long bonds or trend depending on what your audit says, [[defensive-assets]], [[market-regimes]]). Then the **time dimension**, the bond tent: bring the equity share down with new money starting now, and write the climb back up into the plan ([[glidepaths]]). Last, **where it all sits**: the shopping list of blocks, and which account holds each one ([[building-it-with-us-etfs]], [[us-accounts-and-account-order]]). Six to eight holdings, each with a named role. ## Step 4: the rule and the protections (one evening) Set the **withdrawal rule** with the five-step procedure ([[choosing-your-strategy]]: the admission tests, the matrix, the hybrid by phase), and put a number on every parameter. Most plans land on the same shape: steered through the bridge years, proportional once the pension covers the floor. Next the **buffer** and its flow rules, meaning size, trigger, refill and the year it goes away ([[cash-buffer]], [[refilling-the-buffer]]). Then the ladder, if you are building one for the bridge floor ([[bond-ladders]]). Then flexibility, in writing: an indexation freeze, a cut at a threshold ([[flexibility-in-practice]]). Last, the margins you name without counting them: skills kept current ([[going-back-to-work]]), a home you could turn into cash ([[real-estate-in-retirement]]), whatever side income comes naturally. ## Step 5: validating across models (one session with a simulator) The finished plan goes on the test bench, with the audited inputs and nothing else. A typical session is walked through control by control in [[using-the-fire-simulator]]; here is the recipe that closes the build. Read it on the weight of the evidence: the central case acceptable at **your** threshold ([[failure-probability]]), the broad sample tolerable with its failures examined ([[historical-vs-parametric]]), the 1966 and 2000 vintages crossed, a lost decade survivable. Then look at the standard of living actually delivered in the worst quartile of paths, in the depth of the cuts and in how long they last, not just at the failure probability. The gap between the central model and the sequence stress tells you what a bad sequence would cost, softened by your protections ([[sequence-of-returns]]). Sensitivities settle the rest: spending plus or minus 10%, returns plus or minus 0.5 points, the pension two years late. Does the decision survive all of it? A solver, working in equivalent moves, is the last cross-check: it converts each margin into dollars, into years or into flexibility (if a cheap lever is lying around, take it now). A plan that passes this recipe is a plan. The others fail one test and go back to the step they came from. That is the build working as intended. ::: astuce The one-page template The deliverable, to copy out and fill in. **PLAN FOR [names], version [1], [date].** 1. **The numbers.** Comfort spending [$X], floor [$Y]; pension [$Z] at [age], marked down; horizon [N] years. 2. **The portfolio.** [equity/defensive split]; six to eight holdings, each with its role and its account; band rebalancing at plus or minus 5 points, funded by the withdrawals first; glide path [the path, written]. 3. **The rule.** [name and every parameter]; an automatic monthly transfer of [$M] to [account]; each year's cash blended across the account types, with the bracket call that goes with it. 4. **The protections.** A buffer of [K] months in [vehicle], drawn on when the drawdown passes [S%], refilled outside drawdowns, retired in year [E]; flexibility through an indexation freeze after a red year, then a cut of [C%] if the current withdrawal rate passes [T%], never below the floor; ladder [rungs]. 5. **The thresholds.** Green below [a%] current withdrawal rate: do nothing. Amber between [a%] and [b%]: pay attention, save gently. Red above [b%] at two reviews in a row: the written cut applies. 6. **The never-dos.** Never sell into a crash outside the rule; never change rules in a drawdown; never give the margins away; no decision taken off the news. 7. **Governance.** The annual review on [date], both of you, reverse quiz included; letter of instructions current as of [date]; any decision outside the rule signed by two people. 8. **The margins.** Named, never counted in the plan: [list]. Eight blocks, one page. A block that does not fit in three lines is too complicated to be run ([[couples-and-family]]: the weakest executor sets the size). ::: ## Step 6: writing it down (the evening everyone skips) Filling in the template is not paperwork. It is the final design test. Every box that resists points to a decision you never really made: the threshold you cannot put a number on, the rule you cannot summarize. The finished document then becomes the infrastructure for everything else. It carries the anti-panic ([[the-psychology-of-spending]]: the rule written while calm), the governance of a couple ([[couples-and-family]]: the reverse quiz is run on this page), the continuity of the plan if you are not there (your letter of instructions points to it), and the guardrail against yourself (the **never-dos** of block 6 are the most reread lines in a storm). Date it, version it, and file it where your spouse will find it. ## Step 7: day one (one morning) Doing it is mechanical. The automatic **transfers** first, the plan's monthly paycheck ([[the-psychology-of-spending]]). Then the **orders** at your broker: a gentle migration to the target portfolio, using new money and the accounts where trading costs you no tax first, and spreading the taxable sales over several years. The buffer funded ([[cash-buffer]]). The vehicle for side work opened, even if it stays dormant ([[going-back-to-work]]). The paperwork: beneficiary designations reread, the letter of instructions, the power of attorney. And the first review booked in the calendar. The plan is alive. ::: exemple A whole plan, condensed Aline and Thomas (46 and 48, leaving in two years), their v1 exactly as written, in the order of the template. - **The numbers.** Comfort spending $54k, floor $41k (tested); pensions of $26k at 67, marked down 15%; horizon 52 years; $1.75M in total, of which $300k in tax-free accounts (two of them, both full), $480k tax-deferred, $880k taxable and $90k in cash savings; target and initial rate at 3.5% with the margins, validated. - **The portfolio.** 68/32: world equity 17% in the tax-free accounts and 34% in the taxable one, small-cap value 8%, 5 to 8 year government bonds 12%, short linkers 8%, gold 5%, trend 5%, stable value 11%; plus a tent taking equity from 58% to 80% over ten years, funded by the bond withdrawals. - **The rule.** Risk-based guardrails through the bridge (target 5% central-case failure, a −10% cut when it passes 13% at two reviews, a +10% raise below 1%, cut floor at 78%), then VPW; an automatic withdrawal of $4,500 a month; each year's cash blended across the three account types to keep the tax bill down. - **The protections.** A 26-month buffer in stable value (drawn at an 18% drawdown, retired in year 10), an indexation freeze, and a ladder for the children's college years, 2029 to 2033. - **The thresholds.** Green below 4.3%, amber from 4.3 to 5.2%, red above. - **The margins.** Thomas's contract work (about $12k a year if it is needed), the house (against long-term care), gifts to the children that can wait. Validation done: central-case failure 4.6%, broad sample 9.1% (late failures, in the covered years), 1966 and 2000 crossed, two cuts at most in the worst quartile, the floor never broken. One page. Two years before the exit, the work on the criteria is already behind them. ::: ## The essentials - Seven steps, one order: audited numbers, then the target and the departure criteria (written now, while calm), then the portfolio (the split, the blocks, the accounts, the tent), then the rule and the protections (every parameter numbered, flexibility in writing, margins named), then validation on the weight of the evidence, then **writing it down** (the one-page template, the real deliverable), then day one (the automation, the paperwork, the calendar). - One decision per step, written down with its one-line reason, and no going back before the full pass is done. An imperfect v1 beats an eternal v0.4. - The eight blocks (numbers, portfolio, rule, protections, thresholds, never-dos, governance, margins) fit on one page. A block that overflows means a design too complicated for its weakest executor. - Writing it down is the final test. The box that resists is the decision you never made. The document is the infrastructure of the anti-panic, of the couple, and of continuity. - The plan is alive. It is born complete, it runs from day one, and after that it changes in the one place built for it: the annual review ([[the-annual-review]]). --- ## Going further - Every step points to its own chapters: this book is the documentation for the template. - The validation session, control by control: [[using-the-fire-simulator]]. Picking the rule: [[choosing-your-strategy]]. The life of the plan afterwards: [[the-annual-review]] and [[when-to-worry]]. - The worked households running through the book (Aline and Thomas, Claire and Idris, Léa) are the fastest way to see the seven steps hang together.