Joint Life Expectancy and the Retirement Distribution Period

Blanchett, David M.; Blanchett, Brian C.
December 2008
Journal of Financial Planning;Dec2008, Vol. 21 Issue 12, p54
Academic Journal
• Past distribution research has focused primarily on determining sustainable withdrawal strategies based on fixed distribution periods, such as 30 years. While such research provides valuable information as to the likelihood of a portfolio failing over a predetermined period, it does not directly address the primary goal of retirees: to provide income for life. • For most retirees, a retirement income strategy is likely to be deemed a failure only if it fails while either or both members of the retired couple is still living. Based on this logic, this paper will explore the implications of using joint life expectancy versus a fixed period when determining the appropriate initial sustainable real withdrawal rate for a distribution portfolio. • Based on the research conducted for this papen a sustainable withdrawal rate based on a joint expectancy period results in a 1-2 percent higher withdrawal rate for the same probability of failure than one based on a comparable fixed period. • Using a target end date such as age 90, 95, or 100 is a simple method that can be used to determine an appropriate length for a distribution period for a retiring couple.


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