I recently sent an e-mail to Robert Powell, editor of Retirement Weekly, letting him know of our “Save the Retirements!” initiative. I explained that “the problem is the failure of most existing tools to include adjustments for changes in valuation levels for stocks,” and suggested an article on the topic.
Powell has published at MarketWatch.com an article entitled “New Thinking on Retirement Withdrawals.”
Juicy Excerpt: “Lucas says it’s likely the stock and bond markets will return far less than the historical averages over the next few years. And that could spell trouble for retirees who spend more than 3% from their investment accounts earmarked for retirement spending.”
John Walter Russell’s safe-withdrawal-rate research shows that, if stocks perform in the future as they have in the past, a retirement portfolio of 80 percent S&P stocks and 20 percent TIPS will last at least 30 years with a 3 percent withdrawal, even for a retirement beginning at today’s valuation levels.
Please note that the article points out that the dangers of the conventional methodology studies are even greater for those planning early retirements. This is a point that was emphasized by William Bernstein (author of The Four Pillars of Investing) in his warnings about the conventional methodology studies that he posted to the Vanguard Diehards discussion board.
Save the Retirements!