Faculty Publications


Retirement Planning and Worst-Case Scenarios

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New research suggests that skepticism in a 4% safe withdrawal rate (SWR) is well justified. It is perhaps due to good luck that American retirees have not yet experienced a withdrawal rate below 4%. But a better approach than worrying about SWRs is to focus on the savings rate needed to meet your retirement spending goals, not on what the safe withdrawal rate is. New research published in the July 2011 Journal of Financial Planning, A Safer Safe Withdrawal Rate Using Various Return Distributions by Manoj Athavale and Joseph M. Goebel, got me thinking about low SWRs.