Longevity: Does 4% Withstand the Test of Time?Longevity: Does 4% Withstand the Test of Time?
Your clients nearing retirement age need to be concerned about outliving their investments.
May 9, 2019
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People are living longer than ever before*, so besides planning for the ever-changing investment environment, they run the risk of outliving their savings. Living longer is great news to most, but, it poses a greater financial risk.
Practitioners can no longer rely on the 4% annual portfolio withdrawal rate rule of thumb. Also, you can no longer expect the same rate of return on a traditional portfolio mix.
Ryan Nauman, Market Strategist for Informa Financial Intelligence’s Zephyr business, investigates whether a portfolio in the current, low interest rate environment provides enough income and appreciation to offset a 4% rate of withdrawal over extended time periods.
*Current life expectancies are reaching 79 years according to a World Bank report.
