Faculty Publications


The Costs of Retirement with Different Income Tools

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How much can clients sustainably spend in retirement? A typical starting point to answer this question is Bill Bengen’s research published in the Journal in 1994. More generally, though, we can approach answering this in two different ways. First, we can consider dedicated income sources, such as building ladders of individual bonds or using income annuities. Second, we can consider spending rates for diversified investment portfolios in which market volatility will play a much bigger role in determining retirement sustainability.