A Richer Retirement

Know exactly how much you can safely spend each year after you retire without outliving your nest egg In A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More, entrepreneur, researcher, and financial planner, William P. Bengen, delivers a straightforward, soup-to-nuts guide for maximizing your withdrawals from your investment accounts during your retirement. The author explains how you can draw heavily on your retirement accounts without spending yourself into premature poverty. This book is a comprehensive roadmap to constructing your personal retirement withdrawal plan. You'll learn how to compute a low-risk maximum withdrawal rate so that you can enjoy your retirement savings to the utmost. You'll also discover guidance on why and how to adjust your withdrawals during retirement to help make sure that your accounts last your entire life. You'll also find: - The eight elements of a comprehensive personal retirement withdrawal plan - Techniques for selecting your withdrawal rate based on the eight elements, inflation, and stock market valuation - A template for your withdrawal plan that will help you recognize if you're overspending (or underspending!) and exactly how to address that issue Perfect for well-informed laypeople entering, nearing, or in retirement, A Richer Retirement is a can't-miss retirement playbook for everyone who wants to make the most of their retirement savings without outliving their nest egg. It's also an essential read for financial professionals who serve clients in or close to retirement.

WILLIAM P. BENGEN is a financial researcher and former Certified Financial Planner licensee. He's an expert in the sustainability of withdrawals from stock and bond portfolios and is frequently quoted in major financial publications. He's a recipient of the NAPFA's Robert J. Underwood Distinguished Service Award.

Introduction xvii Acknowledgments xxi Chapter 1 The Problem: Outliving Your Retirement Savings 1 1.1 Portfolio Longevity, Bear Markets, and Inflation 2 1.2 My Research Methodology 7 1.3 Genesis of the "4% Rule" 10 1.4 Recent Research 12 1.5 The "Balloon" Analogy 13 Chapter 2 The Solution: Introducing "safemax" 15 2.1 The "Universal SAFEMAX" 15 2.2 A Brief History of the Universal SAFEMAX 18 2.3 Over-Use of the Universal SAFEMAX 19 2.4 "Feeling Lucky" Method for Selecting a Personal SAFEMAX 22 2.5 SAFEMAX and Stock Valuations: The "Kitces Chart" 24 2.6 Inflation and SAFEMAX 27 2.7 How Well Does Our SAFEMAX "Fitted Curve" Agree With History? 36 Chapter 3 THE Eight ELEMENTS OF A PERSONAL RETIREMENT Withdrawal Plan 39 3.1 Element #1: Withdrawal Scheme 40 3.2 Element #2: Planning Horizon 41 3.3 Element #3: Taxable Vs. Non-Taxable Portfolios 42 3.4 Element #4: Leaving a Legacy to Heirs 43 3.5 Element #5: Asset Allocation 43 3.6 Element #6: Portfolio Rebalancing Frequency 44 3.7 Element #7: The Superinvestor: Striving for Above-Market Returns 44 3.8 Element #8: Withdrawal Timing 45 3.9 The "Standard Configuration" for the "4.7% Rule" 45 Chapter 4 Element #1: Withdrawal Schemes 47 4.1 "COLA" Withdrawal Scheme 47 4.2 "Fixed Annuity" Withdrawal Scheme 48 4.3 "Fixed Percentage" Withdrawal Scheme 54 4.4 "Front-Loaded" Withdrawal Scheme 65 4.5 Performance-Based Withdrawal Schemes 68 4.6 David Blanchett's Retirement "Smile" 75 Chapter 5 Element #2: Planning Horizon 79 5.1 Life Expectancy and Planning Horizon 79 5.2 Universal SAFEMAX Vs. Planning Horizon (Standard Configuration) 80 5.3 SAFEMAX Vs. Planning Horizon (Other Sample Retirees) 82 5.4 Conclusion 85 Chapter 6 Element #3: Taxable Vs. Non-taxable Portfolios 87 6.1 My Initial Dilemma 88 6.2 Investment Characteristics 89 6.3 SAFEMAX and Portfolio Tax Rates 90 6.4 Which PTR Do I Use for My Portfolio? 93 Chapter 7 Element #4: Leaving a Legacy to Your Heirs 95 7.1 SAFEMAX Vs. Legacy for the Standard Configuration 96 7.2 SAFEMAX Vs. Real and Nominal Legacy 97 7.3 SAFEMAX Vs. Legacy for Other Sample Retirees 98 7.4 Conclusion 101 Chapter 8 Element #5: Asset Allocation 103 8.1 The Significance of Asset Allocation 103 8.2 SAFEMAX Vs. Asset Allocation: A Historical Perspective 104 8.3 Which Asset Allocation Is Right for Me? 110 8.4 Treasury Bills Vs. US Government Bonds: What's the Optimum Mix? 111 8.5 How Do I Allocate Among Multiple Stock Asset Classes? 115 8.6 Even More Asset Classes? 117 8.7 Exotica: Alice in Assetland 118 8.8 Optimum Asset Allocation Vs. Planning Horizon 127 8.9 Varying Equity Allocation During Retirement: Is It Effective? 131 Chapter 9 Element #6: Portfolio Rebalancing 137 9.1 SAFEMAX Vs. Portfolio Rebalancing Interval 138 9.2 Portfolio Rebalancing Vs. Glidepath Investing 143 9.3 Rebalancing and Portfolio Returns 144 Chapter 10 Element #7: the "superinvestor" - Striving for Above-market Returns 149 Chapter 11 Element #8: Timing of Withdrawals 155 Chapter 12 Creating and Managing a Personal Retirement Withdrawal Plan (five Case Studies) 159 12.1 Withdrawal Plan #1 160 12.2 The Current Withdrawal Rate, a Powerful Tool 162 12.3 The Synthetic CWR Template 164 12.4 Synthetic CWR Template for Retiree #1 166 12.5 Managing a Personal Withdrawal Plan 167 12.6 Managing Withdrawal Plan #1 (Early Bear Market) 169 12.7 Withdrawal Plan #2 171 12.8 Managing Withdrawal Plan #2: Unexpected High Inflation 174 12.9 Withdrawal Plan #3 180 12.10 Managing Withdrawal Plan #3 (Front-Loaded Withdrawal Scheme) 188 12.11 Withdrawal Plan #4 191 12.12 Managing Withdrawal Plan #4 (Saving the Best for Later) 193 12.13 Withdrawal Plan #5 197 12.14 Managing Withdrawal Plan #5 (Changing Horses Mid-Stream) 200 Chapter 13 Topics of Special Interest 207 13.1 Has the 4.7% Rule Already Failed? 207 13.2 Required Minimum IRA Distributions and SAFEMAX 212 13.3 Should I "Buy-and-Hold"? 215 13.4 Annuities 217 13.5 When the Shiller CAPE Is "Off the Charts" 219 13.6 Is It Science? 220 13.7 Should I Wait for a Higher SAFEMAX to Retire? 224 Chapter 14 Go Forth and Plan! 229 Appendixes Appendix A Books Worth Reading 233 Appendix B Articles Worth Reading 235 Appendix C Software Worth Using 239 About the Author 241 Index 243