Wade Pfau Posts More New School Safe Withdrawal Rate Research

Wade Pfau, associate professor of economics at the National Graduate Institute for Economic Studies, has published additional New School safe withdrawal rate research. The new study is titled Withdrawal Rates, Saving Rates and Valuation-Based Asset Allocation.

Juicy Excerpt: While most everyone would agree that valuations matter, the question remains as to whether clients with a long-term outlook (such as those planning for retirement) can hope to act successfully on information about valuations. This article provides favorable evidence based on the historical record for long-term conservative investors to obtain improved retirement planning outcomes (lower savings rates, higher withdrawal rates) using valuation-based asset allocation strategies.


  1. what says

    Maybe a more realistic test scenario might be useful? Comparing two strategies in ~25%+ savings rate situations seems not useful.

  2. Rob says

    I don’t understand your comment, What.

    Are you able to explain what you mean when you say that it is “not useful”?


  3. Rob says

    Okay. Thanks for your response.

    I understand that the saving statistics are shockingly poor. I don’t see that as constituting a justification for reporting what the historical data says about what works in stock investing inaccurately.

    The people who read Wade’s research are not saving zero, What. Maybe once in their lifetime they saved zero. But people with zero savings do not have money to invest and so they are not going to take time out of their day to read investment research.

    The people who take time to read investment research want to learn how to invest effectively. Anyone who suggests that it doesn’t matter whether investment research gets the numbers right or not is making a foolish claim.

    It’s a shocking reality that I even need to type these words out here. The claim that it doesn’t matter whether retirement studies get the numbers right or not is obviously foolish. Any human who finds himself or herself making such a statement needs to take a breather and try to figure out how he or she got on the wrong track.

    The purpose of retirement studies is to help people plan successful retirements. You obviously do not achieve that purpose when you get the numbers wildly wrong.

    Also, water is wet. I thought I should make note of that before uncertainty over the question causes some heated “controversy” to develop.


  4. what says

    I am just saying, if the ‘solution’ Wade has to offer is a 25% savings rate then the ‘victims’ are doomed.

  5. Rob says


    I don’t think any of us are doomed. It’s important to understand that the national saving rate is an average. There are always some people saving at a multiple of that and some saving at a rate less than the average.

    Wade is helping us all out by looking at a number of possibilities. I can imagine people reading his work who are 100 percent capable of pulling off a 25 percent saving rate. I was saving at a rate far in excess of that in the years when I was seeking to be able to resign from my corporate job as quickly as possible.

    And, yes, there will be some who will not be able to save 25 percent. They can benefit from reading other sections of Wade’s study or other studies altogether. Or it may be that as s society we will find ways to help them out. Or it may be that people focusing on saving issues rather than investing issues will come up with entirely new ways of saving (hint — take a look at the name of this site) that will help these people turn things around.

    So long as Wade is putting forward powerful and good stuff, I don’t think we should find fault because he doesn’t solve every problem that ever existed with every sentence that appears in his studies. Let him do what he can! And let all the others chip in and do what they can too!

    My sincere take.


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