Retirement Calculator Smashes Safe Withdrawal Rate Myths

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The Retirement Risk Evaluator is the first retirement calculator to consider the effect of valuations on the survival of a stock portfolio.

The best-informed investing experts (John Bogle, William Bernstein and Robert Shiller, among others) have pointed out that changes in valuation levels have a significant effect on long-term stock returns. Unfortunately, most of today's retirement calculators fail to take the valuation factor into account in identifying safe withdrawal rates. The result is that millions of retirements have been put at risk of going bust in the event that stocks perform in the future much as they always have in the past.

Rob Bennett, owner of the web site, today announced release of the first "New School" retirement calculator, The Retirement Risk Evaluator. The new calculator is available free of charge at the web sites run by Bennett and by John Walter Russell, its co-developer. The calculator page at Bennett's site is -- The calculator page at Russell's site is --

"The idea that a 4 percent withdrawal is safe for retirements beginning at all valuation levels is a dangerous fantasy," said Bennett. He explained that the safe withdrawal rate for high-stock portfolios used in retirements beginning today is about 3 percent and that it was 2 percent for portfolios used in retirements begun at the top of the recent price bubble, according to the new retirement calculator.

The good news, according to Bennett, is that it remains possible for today's retirees to obtain a 4 percent safe withdrawal rate by lowering their stock allocations. Also, "the same historical stock-return data that reveals the fallacy of the infamous 4-percent rule at times like today also shows that safe withdrawal rates for high-stock portfolios climb much higher than 4 percent at times of moderate and low valuations," the co-author of the new retirement calculator said.

Rob Bennett writes the daily "Financial Freedom Blog" and is the author of "Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work." His next book, "Investing for Humans: How to Get What Works on Paper to Work in Real Life," is slated for publication in 2008.


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