Perfect Withdrawal in a Noisy World: Investing Lessons with and without Annuities while in Drawdown between 2000 and 2019

Andrew Clare, James Seaton, Peter Nigel Smith, Stephen Thomas

Research output: Contribution to journalArticlepeer-review


We show how the relatively new concept of Perfect Withdrawal Rate can be used in assessing the appropriate sustainable withdrawal amounts from a pot of wealth. This can be applied equally to private retirement funds, endowments, charities, and indeed any context requiring regular withdrawals from an initial pot. The subject of estimating sustainable withdrawal rates usually falls back on describing the likely minimum safe withdrawal possibilities for various portfolio constructions over different decumulation periods. This analysis uses either a long period of historical data or a recombination of the data in the form of Monte Carlo simulations. Here, to illustrate the power of the Perfect Withdrawal concept, we consider the case of someone who started their retirement journey on 1st January 2000, aged 65 and, with the benefit of actual investment returns, consider their investment and withdrawal rate options and the lessons we can learn from this experience. We also introduce the concept and a methodology for purchasing, a delayed annuity, such that at age 85 on December 31st 2019, our retiree had fully transitioned from investment income to annuity income for the rest of their life, no matter how long that may be.
Original languageEnglish
Pages (from-to)9-39
Number of pages31
JournalJournal of Retirement
Issue number1
Publication statusPublished - 19 May 2021


  • Sequence Risk; Longevity Risk, Withdrawal Risk, Delayed Annuities, Adaptive Withdrawals

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