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The easiest way of analyzing the investment expense is to just include it as another planned expense in retirement. The retiree needs to pay for food and housing and gasoline and travel and many other expenses out of their withdrawals. If you're going to use a financial adviser that charges a fee, that fee has to be included in your planned expenses.

I don't see what difference using a 1% fee has vs. using a 0.1% fee or a 0.01% fee. They are all just an expense to be paid out of the withdrawals.

Naturally, a higher investment fee means less money is left to buy food and clothes and travel. But that is just one of the many spending tradeoffs a retiree must deal with.

Peter, I think the point is not whether you use 3% or 4%, but how quickly you'll use up your money over time. Pfau is saying that you'll use it up more quickly at a 4% withdrawal rate than at a 3% rate, which isn't exactly rocket science stuff. My beef is that Pfau used a 1% expense ratio, which would fully account for the difference between a 3% withdrawal rate and a 4% withdrawal rate. Personally, I would rather keep the money than give it to a financial advisor or fund manager. Just satying.
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