@techreport{a13c955fa75c4473aea0ab8ba4d8b926,
title = "Decumulation, Sequencing Risk and the Safe Withdrawal Rate: Why the 4% Withdrawal Rule leaves Money on the Table",
abstract = "We examine the consequences of alternative popular investment strategies for the decumulation of funds invested for retirement through a defined contribution pension scheme. We examine in detail the viability of specific {\textquoteleft}safe{\textquoteright} withdrawal rates including the {\textquoteleft}4%-rule{\textquoteright} of Bengen (1994). We find two powerful conclusions; first that smoothing the returns on individual assets by simple trend following techniques is a potent tool to enhance withdrawal rates. Secondly, we show that while diversification across asset classes does lead to higher withdrawal rates than simple equity/bond portfolios, {\textquoteright}smoothing{\textquoteright} returns in itself is far more powerful a tool for raising withdrawal rates. in fact, smoothing the popular equity/bond portfolios (such as the 60/40 portfolio) is in itself an excellent and simple solution to constructing a retirement portfolio. Alternatively, trend following enables portfolios to contain more risky assets, and the greater upside they offer, for the same level of overall risk compared to standard portfolios.",
author = "Andrew Clare and James Seaton and Smith, {Peter Nigel} and Stephen Thomas",
year = "2017",
month = jul,
day = "3",
language = "English",
series = "Discussion Papers in Economics",
publisher = "Department of Economics and Related Studies, University of York",
number = "17/06",
type = "WorkingPaper",
institution = "Department of Economics and Related Studies, University of York",
}