Retirement income: Risks and strategies

The book was published in 2012 and in a recent phone interview I asked Dr. Warshawsky for his thoughts on important topics that retirement advisors should monitor in addition to those covered in the book. One topic we discussed was the 4 percent withdrawal rule that has become a popular rule-of-thumb among advisors and investors. He mentioned that some researchers are questioning whether the strategy, first introduced by advisor William Bengen, CFP in 1994, still holds. “There’s some uncertainty as to whether the old Bengen rule would still work in an environment of low interest rates, maybe somewhat lower overall asset returns but, also, whether it would work… as people live longer and longer,” he says.

“Thirty years really is not long enough anymore and, therefore, I think that’s another theme that I see in financial planning. And, then, finally, I think some people might think that the rule, although it was very elegant and because it was so simple, is maybe a little too simple. Life is more complicated than 4 percent plus inflation can really accommodate.”