1.) What are safe withdrawal rates and why are they important.
2.) A review of the three different "generations" of research about safe withdrawal rates.
3.) The importance of taking into account market valuations when setting safe withdrawal rates.
4.) The importance of the sequence of returns in the first few years of retirement on safe withdrawal rates.
5.) The negative impact of inflation on safe withdrawals rates.
6.) A better process to follow when setting expectations for retirement spending.
Following along the same path as Todd, I have developed a process to simulate the future safe withdrawal rates given current market values, inflation, and a whole range of other factors. I am also able to run this analysis 20, 30, or 40 years before retirement, in time for an investor to make meaningful changes to their investment and retirement planning. I have published part one of Recalculating Your Retirement, in which I review what the average Nominal and Real Returns for Equities and the 10 year Treasury have been over the past 140 years.
Tell us what you think...
Kevin Spires, CFA, FRM