Sustainable Withdrawal Rates from Retirement Portfolios: The Historical Evidence on Buffer Zone Strategies

16 Pages Posted: 6 Dec 2011

See all articles by Walt Woerheide

Walt Woerheide

Rochester Institute of Technology (RIT)

David Nanigian

San Diego State University - Fowler College of Business - Finance Department

Date Written: December 6, 2011

Abstract

This paper evaluates the performance of portfolios that dynamically adjust one’s mix of risky and risk-free assets during retirement based on the performance of risky assets. We analyze these “buffer zone” portfolio decumulation strategies over various time periods from 1926 to 2009. We find that they are generally inferior to a simpler static asset allocation at minimizing longevity risk.

Keywords: Buffer Zone, Retirement Planning, Decumulation

JEL Classification: G11

Suggested Citation

Woerheide, Walter J. and Nanigian, David, Sustainable Withdrawal Rates from Retirement Portfolios: The Historical Evidence on Buffer Zone Strategies (December 6, 2011). Available at SSRN: https://ssrn.com/abstract=1969021 or http://dx.doi.org/10.2139/ssrn.1969021

Walter J. Woerheide

Rochester Institute of Technology (RIT) ( email )

COB-RIT
Rochester, NY 14623
United States
585-475-5268 (Phone)
585-475-7450 (Fax)

David Nanigian (Contact Author)

San Diego State University - Fowler College of Business - Finance Department ( email )

5500 Campanile Drive
San Diego, CA 92182-8236
United States
213-545-1036 (Phone)

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