Withdrawals from a Retirement Portfolio: Three Primary Options

$25

Withdrawals from a Retirement Portfolio: Three Primary Options

Craig Israelsen, Ph.D.

We observe that since 1926 a retirement portfolio being drawn down by the current RMD percentages for a period of 25 years finished “above water” (with more than the starting amount) almost 100% of the time (assuming a 60% equity/40% fixed income portfolio). For those who have retirement accounts that are not governed by the RMD, the option to withdraw a set percentage or a COLA-based annual withdrawal is a decision they will need to make. The findings in this analysis would favor a set percentage withdrawal (such as 4% or 5%) because it increases the annual withdrawals (due to growth in the portfolio) without endangering the portfolio account value.

Free Subscription!

The Journal of Performance Measurement

The Performance Measurement Resource.

Click to Subscribe