Andrew Gluck is a veteran financial reporter and the founder and CEO of Advisor Products Inc., a marketing company serving 1,800 financial advisory firms. read more ...
Wade Pfau on Friday explained why the 4% “safe” withdrawal rate being relied on by many of the nation’s top financial planning professionals may not really be so safe for retirees. An understanding of Pfau’s analysis probably should be required of all financial advice professionals.
Pfau’s presentation, which can be viewed by all members of A4A, succinctly reviews the groundbreaking research by William Bengen, a CFP practitioner who in 1994 began publishing on safe withdrawal rates for retirement portfolios and continues to publish on this topic. However, Pfau tweaks Bengen’s assumptions how much retirees are likely to allocate to stocks and examines the issue in the context of the experience of other developed nations to assess the 4% assumption.
The news is sobering; Pfau finds a 3.2% rate to be safe.
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Andrew Gluck is a veteran financial reporter and the founder and CEO of Advisor Products Inc., a marketing company serving 1,800 financial advisory firms.