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The Problems With A Constant Retirement Spending Strategy

The first method to be tested is the original constant inflation-adjusted withdrawal strategy introduced in William Bengen’s 1994 article, “Determining Withdrawal Rates Using Historical Data.” This will serve as a baseline for subsequent comparison with other strategies. Bengen’s rule says to adjust spending annually for inflation and maintain constant inflation-adjusted [...]
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Does Asset Allocation Affect Withdrawal Rates?

Business & Finance / Personal Finance : Forbes: Personal Finance

One other important factor from William Bengen’s original study is asset allocation. In particular, he recommended that retirees maintain a stock allocation of 50-75%, writing, “I think it is appropriate to advise the client to acce...

Retirement Spending Increases And Decreases Over Time

Business & Finance / Personal Finance : Forbes: Personal Finance

An important simplifying assumption in William Bengen’s research is that retirees spend constant inflation-adjusted amounts throughout retirement. This may be at odds with the spending patterns of many retirees. An exploration of th...

How Should Retirement Spending Adjust to Investment Portfolio Performance?

Business & Finance / Personal Finance : Forbes: Personal Finance

A natural starting point for discussions about retirement spending is the 4% rule. William Bengen look at all the different 30 year periods in US history and found that withdrawing 4% of retirement date assets, and then subsequently...

Should We Base Retirement Income Planning On Historical Data?

Business & Finance / Personal Finance : Forbes: Personal Finance

William Bengen’s 1994 study and the Trinity Study were only meant to serve as starting points. Bengen in particular has gone on to make several advances and addendums to his initial work. He has been joined by numerous other researc...

The Perks Of Being A Flexible Spender In Retirement

Business & Finance / Personal Finance : Forbes: Personal Finance

William Bengen’s 1994 article introduced the concept of the 4% rule for retirement withdrawals. He defined the sustainable spending rate as the percentage of retirement date assets which can be withdrawn, with this amount adjusted f...

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