Somebody just sent me this CNN Money Magazine article touting Wade Pfau's "research".http://money.cnn.com/2014/02/26/retirement/retirement-income...Forget the 4% withdrawal ruleAlmost every asset you can invest your nest egg in now looks expensive by historical standards. What's more, argues Wade Pfau, this has big implications for how you draw down from your savings the money you need to live on. If he's right, it throws one of the best-known retirement guidelines right out the window. <snip>"The probability that a 4% withdrawal rate will work in the future is much lower," he says. His new safe starting point: a 3% drawdown. That means that if you've saved $1 million, you're living on $30,000 a year before Social Security and any other sources of income you might have, not $40,000. Ouch. <snip>Here's a link to Pfau's "research" report.http://corporate.morningstar.com/us/documents/targetmaturity...From page 9 of the report:Each scenario in the analysis is based on a 10,000-run Monte Carlo simulation. Taxes and Required Minimum Distributions (RMDs) from the portfolio are ignored. The analysis assumes a 1.0% fee, or negative alpha, that is deducted from the portfolio value annually. This fee is included to account for unavoidable retirement portfolio expenses paid by the investor (e.g., mutual fund fees, advisor fees, account fees, etc.) for investment management.</snip>Well, duh. I agree that you can only withdraw 3.00% if you're letting a financial advisor skim 1.00%, but why would you do that? You can put together a diversified portfolio at Vanguard for 0.10% in fees or less and take the 4% SWR you're entitled to.intercst
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