“Highly misleading.”

That’s the phrase that William Bernstein uses in his book The Four Pillars of Investing to describe analyses of the historical stock-return data that fail to take the effect of valuations into account.

The book was published in early 2002. It is now early 2006.

Go to a search engine, enter the term “retirement planning tools” to find studies and calculators that can advise you as to how much you can plan to safely withdrawal from your stock portfolio after you retire, and what do you find?

You find calculator after calculator, study after study, that reports as “safe” withdrawal rates that are in fact not safe. You find study after study, calculator after calculator, that violates The Bernstein Rule by reporting on what the historical data says without making an adjustment for changes in valuation levels. You find study after study, calculator after calculator, that gets the most important numbers wrong.

This is unacceptable. This is dangerous. This is unconscionable.

We must demand better of the people who purport to calculate what the historical stock-return data says about what withdrawal rates are safe in retirement. “Raddr” (owner of the raddr-pages.com discussion board) has described the conventional-methodology calculators and studies as “junk science.” The first time I heard him use that phrase, I viewed it as possibly too strong a way of making the point. Not today. Raddr was right. When you report numbers, you take on an obligation to report the numbers accurately. Fail to do so and you indeed are producing junk. Dangerous junk.

The failure of the publishers of retirement planning tools to correct their studies and calculators in the face of what has been learned in the past four years about what the historical stock-return data really says is a scandal. If stocks perform in the future somewhat in the way in which they always have in the past, the false claims put forward in most retirement planning tools are going to cause millions of retirees to be left destitute in their 60s and 70s and 80s and 90s. Not good.

We need to do what we can to get the word out on this scandal. When people construct retirement calculators or studies that purport to tell people what withdrawal rates are safe, they take on an obligation to report fairly and accurately and honestly what the historical data really says on the question. The publishers of most of today’s retirement planning tools have failed to honor their responsibilities. They must be called to account before their failure to make the corrections needed causes millions of retirements to go bust.

There was a time when the methodologies used in the tools were state-of-the-art methodologies. I understand that the errors in today’s calculators and studies were not put into them intentionally. The fact remains that four years have passed since Bernstein published his book and in that time the case in support of what Bernstein says has only grown stronger and stronger and stronger and stronger. Those who develop retirement planning tools have a responsibility to stay up to date on developments in their field. When developments reveal to them errors that they made in their calculations, they need to get about the business of correcting those errors promptly. End of sentence, end of paragraph, end of chapter, end of book, end of story.

Our community has done wonderful work over the past 45 months confirming and then re-confirming and then re-confirming once again the flaws of the conventional-methodology safe withdrawal rate studies. The authors of the studies don’t have to take Bernstein’s word for it that they got the numbers wrong. They can check our community work-product to see the point proven in a hundred different ways. It’s important work that we have done, and we all are rightly proud of it.

But by no means have we yet finished the job we have taken on.

It is time to move to a new phase of The Great Safe Withdrawal Rate Debate. The focus of the first 45 months of our discussions was proving the point. The focus of the next 45 months needs to be on getting the word out to aspiring retirees about the flaws of most of today’s retirement planning tools.

I have put out a press release (“Retirement Planning Tools Give Dangerous Advice”) through the PRWeb.com service announcing an initiative to do just that. My hope is that, 45 months from today, on November 13, 2009, an aspiring retiree will be able to put the term “retirement planning tools” into a search engine and obtain accurate, reasonable, analytically valid reports on what the historical stock-return data says about safe withdrawal rates.

Let’s all roll up our sleeves and get about the business of saving some retirements!