Safe Savings Rates: A New Approach to Retirement Planning over the Lifecycle

Safe Savings Rates: A New Approach to Retirement Planning over the Lifecycle
Wade Donald Pfau (National Graduate Institute for Policy Studies, February 11, 2011) 
 
Take-away for retirees and those close to retirement: If you saved 16.62% of pay each year for 30 years preceding retirement, are targeting a 30-year pay-out period, invested 60% equities/40% fixed income pre-retirement (and intend to keep this investment mix post-retirement with annual rebalancing), received pay increases each year equal to the increase in inflation, then historical data shows that you can withdraw whatever you need each year after retirement to have inflation adjusted income from accumulated savings of 50% of your final year's pay. The 16.62% figure refers to what was needed in the worst-case scenario from the historical data. If some of these assumptions don't apply, you need to make necessary adjustments in your withdrawal rate. Table 1 of Pfau's paper provides hints for adjusting for experience different from base assumptions.

The Big Financial Stretch: Preparing for Those Later Decades

The Big Financial Stretch: Preparing for Those Later Decades
Knowledge@Wharton (December 06, 2010)

Good article.  Two comments:

The article asks (but does not answer) the question, "How much is enough for retirees to live on?"  I hope that visitors to this site realize that they can use the simple spreadsheet to "back into" how much accumulated savings they will need to produce their desired level of real annual income in retirement.

This is another article that raises concerns about the 4% Withdrawal rule.  "Critics say such guidelines should not be blindly followed.  The 4% rule 'just doesn't work' when investments are tumbling, says Stezfand [Director of Financial Security] of AARP."

Make Your Money Last a Lifetime, 3 ways to stretch your savings in retirement

Make Your Money Last a Lifetime, 3 ways to stretch your savings in retirement
Jane Bryant Quinn (December 1, 2010, AARP Bulletin)

Calculate Retirement Income With a Simple Online Tool

Calculate Retirement Income With a Simple Online Tool
Steve Vernon (September 9, 2010, CBS Money Watch Blog) 

Research Cautions against 4% Spending in Retirement Rule

Research Cautions against 4% Spending in Retirement Rule
PlanSponsor.com (June 18, 2010) 

Outliving Savings Feared More Than Death

Outliving Savings Feared More Than Death 
PlanSponsor.com (June 17, 2010)