Rethinking a "safe" withdrawal rate

02/10/2013 | Nerd's Eye View blog · InvestmentNews (free registration)

Research suggests that a retiree's "safe" withdrawal rate should be calculated based on market conditions at the time of retirement, writes Michael Kitces. He points to a draft study by retirement researchers Michael Finke, Wade Pfau and David Blanchett, who determined that in the current low-yield environment, the failure rate of the typical 4% withdrawal rate could be as high as 50%. Kitces goes on to say that a 4% withdrawal rate can still be safely realized under certain circumstances. The study illustrates the importance of monitoring retirees' portfolios to make sure they are not skirting too close to failure, he writes.

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Nerd's Eye View blog · InvestmentNews (free registration)

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