A Dynamic Approach to Retirement Income
3 Pages Posted: 9 Jun 2016
Date Written: June 4, 2016
We are all well aware of the pitfalls of a tradition systematic withdrawal approach to retirement income especially in light of what we know about sequence return risk. What if instead of simply assuming we earn 10% on stocks, 5% on bonds, and 2.5% on cash equivalents and withdrawing 4% we utilize forward looking return assumptions based on fundamentals (stocks) and yields (bonds, cash)? The following paragraphs explore the idea and test the concept of a safe relative withdrawal rate.
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