There has been too much emphasis on the portfolio and spending conservatively to keep failure rates low. This is not the whole story for retirement income. Certain circumstances, which we will explore, may allow retirees to accept a higher probability of “failure,” and spend more aggressively from their investment portfolio.

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Often, retirees are limited to accepting whatever a researcher assumes about market returns in order to obtain guidance about sustainable spending rates. I proposed a general framework for determining a safe withdrawal rate for a given retirement duration, acceptable failure probability, asset allocation, and capital market expectations.

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Everyone wants to know where they stand with their finances – Will I be able to have the retirement I want? Do I have enough? Roughly how far do I have to go? Am I overfunded (believe me, it happens)?

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Retirement is this big unknown for so many folks, that when someone offers to nail it down to a concrete number, of course people will line up. The only problem is, it’s meaningless.

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