The Perfect Withdrawal Amount: A Methodology for Creating Retirement Account Distribution Strategies
25 Pages Posted: 19 Jan 2015 Last revised: 18 Aug 2015
Date Written: August 3, 2015
We present a new way to develop withdrawal strategies from retirement portfolios. It is derived analytically, instead of from empirical testing, and it iterates always in the same manner. It is based on a new measure we develop, the Perfect Withdrawal Amount, for which we discuss how to construct a probability distribution and how to apply it sequentially. We also derive a new measure of sequencing risk. We present new strategies built with this framework.
Keywords: Retirement, Optimal withdrawal, Safe withdrawal rate, Withdrawal rule, Sequencing risk
JEL Classification: J26, D81, D14
Suggested Citation: Suggested Citation