Tuesday, December 13, 2011

Withdrawal Rates, Savings Rates, and Valuation-Based Asset Allocation

In discussing William Bengen's interview from the December 2011 JFP in a recent blog entry, I wrote:

In Question 9, William Bengen seems to suggest that the next step for withdrawal rate research could be something like using a valuation-based asset allocation, which I have done for the accumulation phase.  Michael Kitces has explored this for retirement in one of his Kitces reports, though I don't think any public link is available.  I've thought of looking at this, but based on what I could already see with accumulations, it will be a foregone conclusion that a valuation-based asset allocation will increase sustainable withdrawal rates.  The only question, really, is by how much? Perhaps I will write up a column about this for Advisor Perspectives some day.

Well, curiousity got the best of me, and I ended up writing a full research article about this. Not just a short column. The article is called, "Withdrawal Rates, Savings Rates, and Valuation-Based Asset Allocation." Interested readers can download the article from RePEc.