About this episode

The episode discusses the limitations of the Safe Withdrawal Rate as a retirement distribution tool and contrasts it with accumulation planning.

Chris’s Summary Jim and I discuss the Safe Withdrawal Rate as a projection tool before retirement, but not as the distribution tool we would use for many retirees. We address Bill Bengen’s research, the 1968 retiree scenario, Monte Carlo planning, and why a worst-case floor can limit early retirement spending on fun. We also contrast accumulation planning with distribution planning and explain how the See Through Portfolio helps separate different retirement spending needs. Jim’s “Pithy” Summary Chris and I discuss why we think Bill Bengen’s research has real value, while still believing the Safe Withdrawal Rate is the wrong tool once the rubber meets the road in retirement. His work helped advisors move away from unrealistic withdrawal rates, and it can be useful for people still in the accumulation phase who are trying to see if they are on track. But once someone reaches retirement, especially with only so many Go-Go years ahead, I think the tool has to change. The part I don’t like is when the industry takes a worst-case historical number and turns it into the anchor for everyone. Chris and I talk about Bengen’s own comments, Monte Carlo probability…

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