I have completed reading Paul Merriman's book "Live it Up without Outliving Your Money".
One thing that has me confused is the rates of withdrawal in retirement. The standard advice of the "experts" seems to be that one should not plan on withdrawing more then 4% of their portfolio on an annual basis. Paul recommends that a persons total portfolio value should be 20 times their annual retirement income requirement, which basically equates to 5% per year withdrawal rate. However in the retirement withdrawal tables he provides in the book, he uses 6% as a "conservative" rate and 8% as an "aggressive" rate. His portfolios are based on historical data starting from 1970 through 2005. The equity portion is allocated 50% Domestic and 50% International. He ran FI/Equity mixes from 90FI/10Eq to 100% equities in 10% increments. At a 6% withdrawal rate adjusted for inflation all portfolios survived the 35 years with money on the table. Starting at the 40% FI allocation, all portfolios either ended with 100% of the principal intact when adjusted for inflation or in many cases ended with twice or 3 times the starting principal. The "agressive" rate of 8% had a number for failures.
Has anyone read the book? Does anyone have any opinions on the chances of putting together a portfolio that has the chance of surviving a 6% withdrawal rate for 35-40 years?
Any opinions on Merriman?
Thanks
One thing that has me confused is the rates of withdrawal in retirement. The standard advice of the "experts" seems to be that one should not plan on withdrawing more then 4% of their portfolio on an annual basis. Paul recommends that a persons total portfolio value should be 20 times their annual retirement income requirement, which basically equates to 5% per year withdrawal rate. However in the retirement withdrawal tables he provides in the book, he uses 6% as a "conservative" rate and 8% as an "aggressive" rate. His portfolios are based on historical data starting from 1970 through 2005. The equity portion is allocated 50% Domestic and 50% International. He ran FI/Equity mixes from 90FI/10Eq to 100% equities in 10% increments. At a 6% withdrawal rate adjusted for inflation all portfolios survived the 35 years with money on the table. Starting at the 40% FI allocation, all portfolios either ended with 100% of the principal intact when adjusted for inflation or in many cases ended with twice or 3 times the starting principal. The "agressive" rate of 8% had a number for failures.
Has anyone read the book? Does anyone have any opinions on the chances of putting together a portfolio that has the chance of surviving a 6% withdrawal rate for 35-40 years?
Any opinions on Merriman?
Thanks