Kitces and Guyton on the Three Approaches for Retirement Income Planning

Wade Pfau, Ph.D., CFA

by Wade Pfau, Ph.D., CFA

June 18, 2014

Jonathan Guyton and Michael Kitces are both leading advocates of systematic withdrawal strategies for retirement, which involve investing a portfolio using a total returns perspective and having a withdrawal strategy in place to spend down the portfolio sustainably over retirement. This approach is also known as ‘safe withdrawal rates.’

In the following video from the New York Life Center for Retirement Income at The American College, they discuss systematic withdrawals, as well as time segmentation and essentials-vs.-discretionary.

As academics tend to favor approaches related more closely to essentials-vs.-discretionary, it is somewhat uncommon to hear rigorous intellectual defenses of systematic withdrawals. Guyton and Kitces do an admirable job in this video, making it relevant for individuals on both sides of the debate. They defend systematic withdrawals, and they focus particularly on explaining why they think time segmentation and essentials-vs.-discretionary are not better solutions.

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