Cooley, 1999, Financial Counseling and Planning, v. 10 (1)


Cooley, P. L.,
Hubbard, C. M. & Walz, D. T. (1999). Sustainable Withdrawal Rates From
Your Retirement Portfolio. Financial Counseling and Planning, 10(1),
39-47. 


Sustainable Withdrawal
Rates From Your Retirement Portfolio

Philip L. Cooley,(1)Carl
M. Hubbard
(2) and Daniel T. Walz(3)


This study reports the
effects of a range of nominal and inflation-adjusted withdrawal rates applied
monthly on the success rates of retirement portfolios of large-cap stocks
and corporate bonds for payout periods of 15, 20, 25, and 30 years. A portfolio
is deemed a success if it completes the payout period with a terminal value
that is greater than zero. Using historical financial market returns, the
study suggests that portfolios of at least 75% stock provide 4% to 5% inflation-adjusted
withdrawals.


Key Words: Retirement
planning, Retirement wealth adequacy


An earlier version of this article was presented at the 1997 meeting
of the Academy of Financial Services and won the Certified Financial Planner
Board of Standards Award as the Outstanding Paper in Financial Planning.


1. Philip
L. Cooley, Prassel Professor of Business Administration, Department of
Business Administration, Trinity University, 715 Stadium Dr., San Antonio,
TX 78212. Phone: (210) 999-7281. Fax: (210) 999-8134. E-mail: pcooley@trinity.edu.

2. Carl
M. Hubbard, Professor of Business Administration, Department of Business
Administration, Trinity University, 715 Stadium Dr., San Antonio, TX 78212.
Phone: (210) 999-7238. Fax: (210) 999-8134. E-mail: chubbard@trinity.edu

3. Daniel
T. Walz, Professor of Business Administration, Department of Business Administration,
Trinity University, 715 Stadium Dr., San Antonio, TX 78212. Phone: (210)
999-7289. Fax: (210) 999-8134. E-mail:dwalz@trinity.edu


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