The Long View Christine Benz and John Rekenthaler: How Much Can You Safely Spend in Retirement?
Dec 21, 2021
John Rekenthaler, an expert at Morningstar Research Services, joins Christine Benz to dive into retirement withdrawal strategies. They discuss a pivotal study that suggests retirees may need to adjust their withdrawal rates lower than in the past due to current market conditions. The duo explores various strategies for sustainable spending during retirement, the risks of relying only on bonds, and the importance of adapting to shifting capital markets. Their insights equip listeners with strategies to enhance financial stability and quality of life in retirement.
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Complexities in Retirement Planning
- Retirees face a unique challenge as almost every retirement planning variable is unknown or unpredictable.
- Lifespan, inflation, spending needs, and market returns are all critical unknowns for determining safe withdrawal rates.
Bengen's 4% Rule Foundation
- Bill Bengen's 1994 study established the 4% rule based on a 30-year retirement and balanced portfolio.
- This foundational research remains the cornerstone for more recent withdrawal rate studies.
Variable Withdrawals Boost Sustainability
- Research shows withdrawal methods that adjust spending based on portfolio performance are more efficient than fixed withdrawals.
- Variable withdrawal strategies offer improved sustainability and lifetime withdrawals.
