brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 6, 2003
- Messages
- 18,085
In the November-December issue of the Financial Analysts Journal, Moishe Milevsky & Chris Robinson published an article that might be of interest to us: "A Sustainable Spending Rate Without Simulation". They lay out a mathematical means to estimate safe withdrawal rates that uses both the expected return and standard deviation of the portfolio as well as the actuarial estimate of a retirees life expectancy. This is done without simulation, historical data, etc. The withdrawal rates they come up with are surprisingly low compared to what we have seen in the Trinity study and other studies (50YO retiree would be 93.6% safe with a 3% inflation-adjusted withdrawal). Clearly this does not jibe with the historical record or many of the other studies. I'd love to understand why they come up with these low withdrawal rates, but frankly, the math is beyond me. Can anyone else comment?