Often when we talk about the Sustainable Withdrawal Rate framework we often talk about the chances of a client running out of money, this how we usually define 'Success Rate'.
We talk and think about the number/ percentage of scenarios in which the client doesn't run out of money, i.e. the client ends up with a balance of £1 or more in their portfolio. What if we changed that? Read More
We spend a lot think about the risk of running out of money in retirement. But one understated risk of spending conservatively in retirement is the risk of dying with too much money!
In this video, we examine the Kitces Ratcheting Withdrawal Strategy. This strategy was first described by financial planner Michael Kitces in his 2015 article.
Kitces’s main point is that Bengen’s baseline withdrawal rule is too conservative. This is because it’s based on the worst historical sequence of return. In reality, an overwhelming majority of market scenarios would support a higher withdrawal rate.
So, Kitces proposed that a retiree starts out with the baseline withdrawal rate, but can increase their spending by 10% if the portfolio value exceeds 150% of the original value. There’s a caveat: these spending increases can only take place once every three years at most. Read More
In a 2008 paper published in the Journal of Financial Planning titled Joint Life Expectancy and the Retirement Distribution Period, Dr David Blanchett, CFA (now Morningstar head of retirement research) and his twin brother Brian Blanchett CFA, CFP, set out a framework for determining withdrawal rates based on survival probability, rather than a fixed planning horizon.In this video, I illustrate how planners can personalise this framework to each client, using the Timelineapp! Read More
In this video, we use Timeline to illustrate the impact of scaling up/down income withdrawal from a portfolio at different phases of retirement. Read More
In this video, I use Timeline to illustrate the impact of this inflation adjustment rule proposed by Guyton on success rate and client's income, in real and nominal terms. Read More
In this video we explore a rule-based approach which caps and collars each year’s inflation adjustments. This way, retirees can avoid extreme changes to their income withdrawal, at least in a nominal sense. A cap-and-collar approach also matches the typical retirement spending pattern. Income increases in real terms but at a slower pace than inflation. Read More
So what if we adopt a withdrawal strategy where the income isn’t adjusted for inflation? This enables a meaningful comparison with level annuity but also as a withdrawal strategy in its right.
This idea of fixed or level withdrawal allows the client to spend more in the early part of retirement because the real income adjusts downwards naturally. Read More
In this video, we show how to illustrate real (inflation-adjusted) and nominal withdrawal from a portfolio under a wide range of inflationary environment. With this, we can help a client can visualise how their income is likely to change over time, depending on the withdrawal strategy adopted. Read More
In this short video, I use Timeline app to show the year-end balance under all historical scenarios since 1900, for any given withdrawal amount. We can see if and when the portfolio is exhausted under each scenario. Given the wide range of outcomes, we can also see the worst case, the 10th, 50th and 90th percentile scenarios. Read More
In this video, I illustrate the impact of changes in asset allocation, time horizon and fees have sustainable withdrawal rate. Read More
This video walks you through how to create a new client profile to Timeline, the sustainable withdrawal rate. In less than 2 minutes! Read More
This video walks you through the dynamic withdrawal strategies available on Timeline, the sustainable withdrawal rate app.
These withdrawal strategies can be broadly classified into 2 categories; inflation-adjustment and spending strategies. Read More
This video walks you through how to create a new client scenario of Timeline, the sustainable withdrawal rate app. Read More