How much can you safely withdraw from your savings during retirement?
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The following is a compilation of papers, articles, websites, books, calculators, etc. that deal with the question, "How much of my savings can I withdraw in each year of my retirement without incurring an undue risk of depleting my assets?" as well as with related retirement planning issues.

The answer, as little as 3% or 4%, may surprise those who've been told by financial advisers or mutual fund companies that 8% or 10% annual withdrawals are sustainable.

The references below are organized according to the source's affiliation, then sorted alphabetically.


Laurence D. Booth [University of Toronto]
Financial Planning with Risk PDF file [May01]

 Moshe Arye Milevsky [York University]
M. A. Milevsky with M. Posner, Money Logic: Financial Strategies for the Smart Investor. Stoddard, 1999, ISBN 0773731717.
Will The True Monte Carlo Number Please Stand Up? [FPA Journal, Jul06]
We set out to investigate the extent to which [Retirement Income Monte Carlo] RIMC simulators—at least the ones that are widely available to the public—provide different answers to this question: Will my number last?. See also: Can You Trust Monte Carlo Models?

The Problems with Monte Carlo Simulation David Nawrocki, FPA Journal [Nov01]
Guidelines for Withdrawal Rates and Portfolio Safety During Retirement John J. Spitzer; Jeffrey C. Strieter; and Sandeep Singh, FPA Journal [Oct07]

The Pension Research Council [The Wharton School of the University of Pennsylvania]
Working Paper Library is a cornucopia of academic papers on retirement planning issues.

The Trinity Study
Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable [Feb98] "What's a reasonable withdrawal rate when living off savings? A look at how various withdrawal rates would have fared based on past market returns provides a useful guide." [also at]
Does International Diversification Increase the Sustainable Withdrawal Rates from Retirement Portfolios? [Jan03] "examines the effect of international equity diversification on the sustainability of a range of withdrawal rates from retirement portfolios with varying U.S. and international stock/bond asset allocations ... suggests that retirees with portfolios composed of 50 percent equities or greater would benefit only modestly in the long run from international diversification."


Discussion Forums

Early Retirement [Early-Retirement.Org]

Investing DURING Retirement [Morningstar]


Financial advisers

Investor Solutions [Frank Armstrong] (Complimentary registration required.)
Investing During Retirement PDF file
Planning for the extra long retirement [May01]
Retirement Planning: Making it Last Forever [Jan99]
Retirement Planning: Not Relying on 'The Averages' [Nov98]

Bengen Financial Services [William Bengen]
Determining Withdrawal Rates Using Historical Data [Oct94] One of the first studies on withdrawal rates.
Asset Allocation for a Lifetime [Aug96] "Takes readers through three client scenarios and recommendations for the clients' retirement money management plans."
Conserving Client Portfolios During Retirement, Part III [Dec97] "The question: How much can clients extract from their portfolios annually without running out of money?"
Conserving Client Portfolios During Retirement, Part IV [May01] examines the effects of such "tweaks" as (a) making smaller withdrawals as retirement progresses, and (b) changing withdrawal rates with portfolio performance. Scott Burns comments.
Baking a Withdrawal Plan 'Layer Cake' for Your Retirement Clients [Aug06] "In determining an appropriate withdrawal rate for a client, the planner must address 'special situations' that can enhance or reduce the withdrawal rate." See also Retiring on slices of 'layer cake'.

Efficient Frontier [Bill Bernstein]
The Retirement Calculator from Hell [Sep98] "One point cannot be made often enough -- when you retire, are you going to be withdrawing a fixed inflation adjusted amount on a regular basis, or are you going to be withdrawing a fixed percentage of your portfolio? This is not a semantic fine point."
The Retirement Calculator from Hell - Part II [Jan01] "Obviously, Monte Carlo has its flaws. But playing with your portfolio's return/risk assumptions gives you a good idea of the tradeoffs between these inputs and retirement success. And it’s lot more realistic than using a simple amortization calculation... by a country mile."
The Retirement Calculator from Hell - Part III [Sep01] "So live a little, and enjoy your money, for tomorrow we may be consumed by the ghosts of Hitler, Lenin, and Attila the Hun. And at withdrawals of 3% to 4% of your nest egg, don’t spend it all in one place."
The Retirement Calculator from Hell - Part IV [Jan03] "If you want to retire early, what matters is not how much you save, but how much more than everyone else you save. In a world where everyone saves as if they’re going to retire at fifty-five, or even at sixty-five, none can." See also Arnott and Casscells, Demographics and Capital Markets Returns
The Retirement Calculator from Hell - Part V [Apr03] "You may think that a real dollar -- one that has been adjusted for inflation -- may buy you just as much satisfaction in the future as it does today. But you’d be wrong."

Cornerstone Wealth Advisors [Jonathan T. Guyton]
Decision Rules and Portfolio Management for Retirees: Is the 'Safe' Initial Withdrawal Rate Too Safe? [Oct04] "This paper establishes new guidelines for determining the maximum "safe" initial withdrawal rate... [and] finds that applying these Decision Rules produces a maximum "safe" initial withdrawal rate as high as 5.8 percent to 6.2 percent depending on the percentage of the portfolio that is allocated to equities."

Financial Security by Design [Peter J Lingane]
How Withdrawals Affect Your Risk of Running Out of Money Before You Run Out of Breath [Part II of Controlling Risk]

FundAdvice [Paul Merriman]
Retirement Income That Never Runs Out
Make Your Retirement Dreams Come True

 Jim C. Otar
High Expectations & False Dreams: One Hundred Years of Stock Market History Applied to Retirement Planning. ISBN: 0968963404. Otar, 2001.
Book that analyses retirement portfolios and withdrawal strategies using one hundred years of US stock market history.
Retirement Portfolio Analysis and Optimization


Fund companies

Phillips, Hager & North
Retirement Withdrawal Rates [Aug04] "Illustrates how both volatility and the time-path (sequence) in which returns are realized can influence how well a portfolio holds its value in the face of annual withdrawals."

T. Rowe Price
Retirement Income Calculator [uses Monte Carlo Simulation]
Determining a Realistic Spending Rate in Retirement
[Go to Issue 65 • Fall 1999 TRP Report newsletter PDF file]

Determine how much you can withdraw
"The amount you can withdraw from your investments each month in retirement will be based on how much you've saved, your asset allocation, how long you expect to spend in retirement, and which withdrawal method you plan to use."
How investment costs affect your retirement spending
"Use the following interactive example to see how lowering your investment costs can help increase the amount of money you have available to spend each year in retirement."
Plan for a long retirement
Estimates the probability of living to a specific age for a single male, a single female or either spouse of a couple. Calculations are based on mortality data from the Society of Actuaries Retirement Participant 2000 Table.



Canada Pension Plan and Old Age Security [Canadian Income Security Programs]

 The Assets and Debts of Canadians • Focus on private pension savings PDF file [Statistics Canada, 2001]


Individual investors

Galeno's Strategy modifies the fixed-percentage withdrawal strategy to smooth out year-to-year variations.
Galeno's Mechanical Retirement Strategy [Aug99] from
A Workshop Retirement Portfolio [Jun00]
Withdrawal Simulator [Aug00] change Strategy from Rebalance to Galeno
Smoothing Fixed Percentage Withdrawals [Nov00]

Sensible Withdrawals or Go With The Flow? [Nov01] Explores the notion of drawing a fixed but minimal percentage of assets to pay the bills plus a discretionary amount when markets are up.
How does your Portfolio grow (or decay?) How much can you withdraw
How long till you're broke?

Nathan Gutman
Financial Planning Help for Retirees

Henry "Bud" Hebeler
Analyze Now!
Setting Retirees on the Right Path [Business Week, Jul00]

Dave Lee
Withdrawal Strategies in Retirement

Mohuck [a participant on Morningstar's Vanguard Diehards forum]
Retirement Investing: Withdrawal Rates

John Norstad
Savings Rate and 'Economic Security' in Retirement
Asset Allocation and Portfolio Survival

Retire Early [John Greaney]
Inflation-Adjusted Annuities [Apr02] Inflation-indexed annuities increase withdrawal rates
The 4% Withdrawal in Bad Times [Nov01] Inflation-indexed bonds increase withdrawal rates
Using TIPS to increase your safe withdrawal rate. [Jul00]
The Retire Early study on safe withdrawal rates - Millennium Edition [Jun00]
Are your mutual fund fees so high you can't retire? [Oct98]
Asset Allocation for the Ages [Sep98]
What's the "safe" withdrawal rate in retirement? [Mar98]

Early Retirement [Cap'n Bill]
FIRECalc How long will the money last?

Bob's Financial Website
Withdrawal Strategies: Articles and More



Scott Burns
New Rules For Retirement Spending? [Nov04] "Sustainable return and real return, not counting changes in valuation levels or yields, have averaged, respectively, 3.3 percent and 1.9 percent."
TIPS and Retirement Withdrawal Rates [Nov01] Real return bonds increase withdrawal rates.
Working Toward a 5 Percent Solution [Jun01] Comments on Bengen's Conserving Client Portfolios During Retirement.
For the Spenders' Portfolio Diversification Is Key [Jul00]
Dangerous Advice from Peter Lynch [Oct95]

Business Week
Spending Safely [Lynn O'Shaughnessy, Jul08] "Bengen and other financial wonks now advocate less rigid approaches to the tricky challenge of sustaining a [retirement] nest egg."
A Better Way to Size Up Your Nest Egg [Christopher Farrell, Jan01]

 Globe & Mail
Don't outlive your money [Rob Carrick, Jul04] Older readers are still uneasy about outliving their money [Gordon Powers, Feb99]

Josh Friedman [Los Angeles Times]
Handling a nest egg without breaking it [Jul00]

Time to replace the 4% withdrawal rule? [Robert Powell, 22Apr10] "Sharpe's study, in essence, shows that retirees waste money by adopting the 4% rule. 'The 4% rule's approach to spending and investing wastes a significant portion of a retiree's savings and is thus prima facie inefficient,' Sharpe wrote... [yet] there's no practical mechanism to replace it with and that further research is required."

Sue Stevens
How Much Can You Spend in Retirement? [Jan01]
More Retirement-Spending Tactics [Jan01]
How Much Can You Withdraw without Going Broke? [Aug00]

The Wall Street Journal
Make It to the End With Money to Spare [04Nov07] "Retirement presents all kinds of pitfalls, including rotten markets, rapid inflation and living longer than expected. To cope with these risks, you have three key tools: interest-paying investments, stocks and products that generate guaranteed lifetime income. What's the best way to use these tools? Here are four strategies."
Retirement on the Installment Plan: A Less-Risky Way to Buy Annuities [Jonathan Clements, 23Nov05] "It takes a lot of nerve to sink a huge chunk of your wealth into a single annuity... there's a better solution: Buy annuities in annual installments."
Retirees Don't Have to Be So Frugal: A Case for Withdrawing Up to 6% a Year [Jonathan Clements, 17Nov04] Retirees may be able to withdraw as much as 6.2% initially, provided they follow three rules.
How Retirees Can Survive Bear Markets [Jonathan Clements, 01Sep02] Strategies to insulate a retirement portfolio from the ravages of a bear market in early retirement. [If link has expired, search Archive for "clements", then select Sep. 01]
Planning For and Thriving During Retirement [Jonathan Clements, May02] A series of three articles, "There's Just No Rest For the Retired Investor", "Keeping the Cash Flowing in Retirement" and "Six Tough Retirement Questions To Mull Before Taking the Plunge".
Retirement Models That Let Reality Bite [Jonathan Clements, Feb01]
Playing the Right Retirement Cards [Jonathan Clements, Nov99]
How golden will your golden years be? [Jonathan Clements, Jun98]



AnalyCorp [Books and software on Monte Carlo simulation]
The Flaw of Averages

Decisioneering [Risk analysis software]

Efficient Solutions [Retirement analysis and portfolio optimization software]

Financial Engines [Retirement advisory tools]

FIRECalc [Calculator: How long will the money last?]

NETirement [Retirement planning tools]

Palisade [@Risk Monte Carlo add-in for Excel]

Pivot Point Advisors [Monte Carlo Retirement Calculator]

 Retirement Life Challenge [Software, Courses, Library]

RetirementCalc/ [Retirement Planning Software]

 RRIFmetic [Retirement Planning Software]

Wagner Associates [The Retirement Spending Planner - R$P]

Zunna [Retirement Planning Software] and Research


How long can I expect to live?

No one knows for sure, "your mileage may vary," etc. but these calculators provide estimates based on your age, gender, genes and other factors.

Life Expectancy Calculator [MSN Money Central]

Mobile Mortality [NetRetirement]

The Longevity Game [Northwestern Mutual Life]
"How long can you expect to live? We developed the Longevity Game to give you a peek into your future by identifying the factors that can lead to a healthier, more productive life."

Probability of living a selected number of years [Vanguard]
Estimates the probability of living to a specific age for a single male, a single female or either spouse of a couple. Calculations are based on mortality data from the Society of Actuaries Retirement Participant 2000 Table.

How long will you live? [Wharton/U Penn]



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