"Evaluate the Viability of Your Retirement Plan"

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Taylor Larimore
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"Evaluate the Viability of Your Retirement Plan"

Post by Taylor Larimore » Wed Oct 04, 2017 2:35 pm


Christine Benz, Morningstar Director of Financial Planning, and member of our Panel of Experts at the upcoming Boglehead Conference, has written an excellent article on the subject: "Am I on track for retirement." These are excerpts:
"Am I on track for retirement?" There are few more important questions in financial planning."

"It's not hard to see why. The right level of savings in the years leading up to retirement--and the "right" withdrawal rate over your specific retirement time horizon--depends on a huge gamut of factors, many of them highly dependent on each individual and others simply unknowable."

"And then there's the mother of unknowables: the duration of our retirement years, which requires us to forecast our own life expectancies."

"The Bogleheads site provides a helpful overview--with links--to both free and paid retirement-planning calculators."

"One of the best starting points for testing the viability of your current spending rate is the "4% guideline." The notion that 4% is generally a safe withdrawal rate was originally advanced by financial planner William Bengen; it has subsequently been refined--but generally corroborated--by several academic studies, including the so-called Trinity study."

"Because sequencing risk poses such a threat, much of the recent research on sustainable withdrawal rates supports the idea of tying in withdrawal rates with portfolio performance. The retiree takes less out in down-market years and can potentially take more out in years when the market performs well, as it has recently. This article takes a closer look at tying withdrawal rates to market performance."
Thank you, Christine!

Best wishes.
"Simplicity is the master key to financial success." -- Jack Bogle

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