Retirement Distributions: Creating a Limitless Income Stream for an 'Unknowable Longevity'

Opiela, Nancy
February 2004
Journal of Financial Planning;Feb2004, Vol. 17 Issue 2, p36
Academic Journal
Several financial planners shared their current thinking on issues as of February 2004, from asset allocation and withdrawal rate to how tax law changes have altered strategies in retirement planning in the U.S. Common wisdom held that the onset of retirement was the time to begin moving out of equities and into bonds. The research conducted by William Bengen, a certified financial planner (CFP) of Bengen Financial Services, used the actual rates of return for each year and the inflation rates to identify the accepted four percent safe withdrawal rate. Kathleen P. Day, a CFP of The Enrichment Group, notes that a withdrawal rate that seemed safe a few years ago may not be safe any longer, saying portfolios are down and they are expecting lower returns. Michael Finer, a CFP, suggested diversifying into additional asset classes. Martin F. Kurtz, CFP, of the Planning Center, uses Monte Carlo simulation and uses Financeware to make the analysis available online for his clients. Day also uses Monte Carlo, but prefers what she calls scenario analysis. In terms of timing, planners also mention that clients in a low tax bracket may want to withdraw just enough from their deferred accounts to take them to the top of the 15 percent income tax bracket.


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