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The Math Of A Big Loss

The numbers are in—and stark. An individual decides to retire after a lifetime of hard work just as the market falls. An investment portfolio subject to market returns would therefore be negatively impacted, and the potential outsized effect could come as a shock.

Source: The Math Of A Big Loss

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Will Low Returns Destroy Retirement?

Despite the ubiquity of the issue in financial planning circles, most prospective clients I encounter have never heard of the 4 percent rule or “safe withdrawal rates”.  Those that have are often more anxious about retiring.  In part, this is their nature. They are concerned so they dig into the matter of making their savings last and are exposed to the various takes on the subject.

Source: Will Low Returns Destroy Retirement?

Research Articles, The Short Series on Retirement Planning

Testing the outcome of different drawdown rules at various initial drawdown rates

This article is an extension of a previous article I titled “Retirement income drawdown strategies: Evaluating different drawdown rules” that focused on some drawdown rules that one can apply in managing your annuity income from a living annuity product.

I’ve listed four possible drawdown rules, namely fixed percentage, inflation-adjusted annuity income, target drawdown percentage and a combination of the latter two rules.

In the first article, I evaluated the outcome of each drawdown rule under a specific set of market return conditions that would have applied for a hypothetical post-retirement period of thirty years.

Furthermore, I assumed that at the onset of retirement the initial drawdown rate would have been the equivalent of 5% of retirement capital. I evaluated each rule against two main objectives, namely to yield inflation-adjusted annuity income over long post-retirement periods (real income objective), and the amount of legacy capital available at different points in a post-retirement period of thirty years (legacy capital objective).

The inflation-adjusted annuity income and combination rules gave the best results for the real income objective, while the fixed percentage and combination rules yielded the most legacy capital at various interval points during the post-retirement period.

In this analysis, the same evaluations are done and benchmarked against the same objectives (real income and legacy capital), but at different initial drawdown rates, starting from 3% up to 7% of retirement capital.

Source: Drawdown_rules_IWD

External

Will Low Returns Destroy Retirement?

Despite the ubiquity of the issue in financial planning circles, most prospective clients I encounter have never heard of the 4 percent rule or “safe withdrawal rates”.  Those that have are often more anxious about retiring.  In part, this is their nature. They are concerned so they dig into the matter of making their savings last and are exposed to the various takes on the subject.

Source: Will Low Returns Destroy Retirement?