Reality check
The implications of applying sustainable withdrawal rate analysis to real world portfolios
DOI:
https://doi.org/10.61190/fsr.v18i2.4940Keywords:
Bootstrapping, Sustainable withdraw rate, Retirement portfolio, Asset allocationAbstract
This paper brings portfolio sustainability research closer to practical application by examining how common practitioner investment and withdrawal strategies impact sustainability. The results suggest that the application of a multiasset portfolio model may improve sustainability success rates relative to simple two-asset models illustrated in previous research, and the advantage becomes more pronounced with higher withdrawal rates and longer time horizons. We also find that a "bonds first" withdrawal strategy appears to be superior to a constant allocation strategy as both time horizon and withdrawal rate rise. Most notably, the results of our analysis suggest that there is no single optimal retirement asset allocation, but rather a continuum of ideal allocations that become increasingly equity-weighted as the investor's required withdrawal rate and/or expected time horizon increase.
Downloads
Downloads
Published
Issue
Section
License
Copyright (c) 2009 Academy of Financial Services
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Author(s) retain the copyright and full publishing rights without restriction.
Author(s) grant the Journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows reusers to distribute, remix, adapt, and build upon the material in any medium or format, for noncommercial purposes only. Reusers must acknowledge the work's authorship and initial publication in this Journal.
Noncommercial means not primarily intended for or directed towards commercial advantage or monetary compensation.
In addition, FSR grants to the UGA Libraries a worldwide, non-exclusive license to all content published by the Journal, including metadata, that is necessary to publish, transmit, and index the Journal and to preserve its content over time.
