Chances of retirees running out of money more than 50%

Retirees with a 40% equity, 60% bond portfolio and a withdrawal rate of 4% have a more than 50% chance of running out of money over a 30-year time horizon, according to a recent study.

Read: Portfolio income in retirement a matter of luck: Otar

The Wall Street Journal’s MarketWatch breaks down the report and shows the Monte Carlo simulators some financial planners rely on have major theoretical and practical limitations.

“Monte Carlo is definitely a step in the right direction, but it’s a relatively complex approach that [can] be both useful and dangerous to advisers and people at the same time,” says one of the study’s authors.

Read more here.

Also read:

Determinants of growth in distribution portfolios

Lifelong retirement income: the zone strategy

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.