Using the Minimum Acceptable Annual Withdrawal with the Perfect Withdrawal Rate rule

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

Research output: Contribution to journalArticlepeer-review


We show how to use the concept of Perfect Withdrawal Rates to quantify appropriate retirement withdrawal amounts year by year based on changing returns and (probably) in conversation with an adviser, using both historical strings of returns and Monte Carlo simulations. We show how the ‘strings’ approach is superior (i.e., more ‘realistic’) in practice to Monte Carlo. The preferred withdrawal strategy is ‘adaptive’ as information is updated, and our suggested measure of success is how well a withdrawal strategy performs against a targeted withdrawal financial amount, most likely chosen in discussion between a retiree and an advisor, and is labelled as the Minimum Acceptable Annual Withdrawal (MAAW) rate. We suggest that this offers a very simple, practical and intuitively appealing measure of success for the performance of portfolios in the decumulation context. We also discuss the use of delayed and deferred annuities in this context, and the associated target residual financial sum.
Original languageEnglish
JournalJournal of Retirement
Publication statusPublished - 1 Apr 2023

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