Withdrawal Rates: The Flaw in the 4% Rule

RELATED CONTENT

What the Experts Say About 4% Withdrawal Rates

Conventional wisdom holds that 4% is the most prudent withdrawal rate during retirement. But a body of work has sprung up testing all kinds of assumptions and variables. If you're doing any kind of distribution planning, you should be familiar with the following seminal studies.

Build a Retirement Portfolio That Lasts

Distribution portfolios are extremely vulnerable to market losses. The key to protecting retirees' income is to construct a multi-asset, low-correlation portfolio that takes into account worst-case maximum drawdown, frequency of loss, and probability of recovery.

5 Warning Signs That a Retirement Portfolio Won't Last

Price-to-earnings ratios are one way to gauge whether a distribution portfolio has staying power. Withdrawal rate as a percentage of portfolio value or compared with annuity payments are two more. Following are five indicators that will give you eight to 30 years' advance notice of when a portfolio will be depleted.

How Market Losses Affect Retirement Portfolios

Using historical data, we compare the different recovery times for withdrawal vs. buy-and-hold portfolios. Then for fun, we explore how fast an all-stock retirement portfolio would recover compared to all-bond, global multi-asset, and traditional 60/40 portfolios. And the winner is...