Probability-of-Failure-Based Decision Rules to Manage Sequence Risk in Retirement

Frank, Sr., Larry R.; Mitchell, John B.; Blanchett, David M.
November 2011
Journal of Financial Planning;Nov2011, Vol. 24 Issue 11, p44
Academic Journal
The article presents research paper that depicts how practitioners can better use the often-neglected probability failure as a tool in decision making for managing sequence risk in retirement. It mentions that withdrawal rates relies on the age of retiree, thus withdrawal rates alone do not present an overall sustainable distribution story. It notes that the methodology offers an ability to assess the withdrawal rate and exposure to sequence risk together. Moreover, it states that comparison of probability-of-failure curves and their changes between strategies, demonstrates how effective one strategy is compared with another.


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