Withdrawal studies center on
- 60/40 market weight portfolio, 25 year withdrawals, U.S. market returns and volatilities
- arriving at past 4% of initial portfolio value + annual inflation withdrawals, no resetting
- using lower & higher starting withdrawal rates for longer & shorter withdrawal periods
- more activities early with more healthcare later, for nearly level spending until later life
Average retiree divides average portfolio over initial life expectancy + annual inflation.
While they’ve usually omitted
- lower returns, higher volatility, and longer bad runs exhibited by other capital markets
- lower dollar weighted return, past investing costs, more conservative retiree portfolios
Average retiree divides an average portfolio annually over remaining life expectancy.
With some authors suggesting
- changing allocations 1% yearly toward more bonds has little effect on withdrawal rates
- retirees have declining expenses during retirement, reducing the need to offset inflation
- overweighting past higher return assets for higher withdrawal rate or insufficient assets
Retiree divides an age weighted portfolio annually over remaining life expectancy.