Introduction The “4% rule” is a popular asset withdrawal rule of thumb that has historically helped guide retirement planning. While it served us well in the past, new external data sources and techniques can substantially enhance retirement planning until and through retirement. In this paper we highlight a number of detailed insights on retirement readiness and provide a comparative analysis using different methods. One of the most prominent questions new retirees face is how much they can safely withdraw from their accumulated retirement savings each week, month or year. The practical issue for advisors is rooted in their clients’ financial situations and subsequent behaviors. Clients generally need to supplement their retirement incomes (primarily Social Security) with withdrawals from their accumulated savings in order to continue living their preretirement lifestyle into their retirement years. Advisors have been trained to address this client behavior by assuming that their clients will withdraw assets in much that same way as they accumulated them—systematically and in a structured way. Clients used a contribution rate to accumulate assets. They therefore must use a withdrawal rate to access their asset. Determining the “right” amount of money to safely access devolves to an exercise of determining the appropriate rate of withdrawal from a specified pool of assets. Bill Bengen’s seminal study in the October 1994 Journal of Financial Planning, “Determining Withdrawal Rates Using Historical Data”, helped usher in the modern area of retirement withdrawal rate research, by providing an answer to this question [1] . Bengen examined every 30-year retirement period since 1926, reconstructing market conditions and inflation. He identified 1969 as the worst year for retirees because a combination of low returns and high inflation had eroded the value of savings. Using that year as his worst case, he tested different withdrawal percentages to see which one would allow savings to last 30 years. At first, four percent worked, he writes, based on a portfolio with a 60/40 split between large-cap stocks and intermediate-term government bonds [2] . In due course, Bengen decided to add smallcap stocks to the mix and revised his recommendation to 4.5 percent. However, the four percent name persisted – and eventually the “Four Percent Rule” was born.

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