Finance and Financial Management Commons^™

How Long Does Savings Last When Retirees Need More Money (Or Less) Than Conventional Wisdom Suggests?, Steven J. Welch

Forum Lectures

Popular convention is to initially withdraw approximately 4% of the retirement savings and increase that dollar amount each year by inflation. But, what if 4% isn't enough? How long will retirement funds last if a newly retired person needs 5%, 6%, or even 10%? Modern Portfolio Theory (MPT) suggests that an investor only needs to choose between 2 assets, the risk free rate and an optimal risky portfolio. In this research, five U.S.-based assets are tracked from 1934 until 2015 to see how long they survived independently and in combination with one other asset. Obviously the more a person needs …