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Will 2000-era retirees experience the worst retirement outcomes in U.S. history? A progress report after 10 years

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  • Pfau, Wade Donald

Abstract

We find evidence that retirees in 2000, in particular, are on course to potentially experience the worst retirement outcomes of any retiree since 1926. This holds for a wide variety of asset allocations and withdrawal rate strategies. Wealth depletion is taking place more rapidly for 2000-era retirees than for retirees who even endured the Great Depression or the stagflation of the 1970s. Though moderate inflation during the past decade has resulted in current withdrawal rates that are a bit less for the 2000 retiree than for some retirees in the 1960s, this is hardly reassuring with further analysis based on the required future asset returns needed for sustainability. Our findings cast doubt as to whether the 4 percent withdrawal rate rule will be sustainable for turn-of-the-century retirees.

Suggested Citation

  • Pfau, Wade Donald, 2010. "Will 2000-era retirees experience the worst retirement outcomes in U.S. history? A progress report after 10 years," MPRA Paper 27107, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27107
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    References listed on IDEAS

    as
    1. Wade D. Pfau, 2010. "An International Perspective on Safe Withdrawal Rates from Retirement Savings: The Demise of the 4 Percent Rule?," GRIPS Discussion Papers 10-12, National Graduate Institute for Policy Studies, revised Oct 2010.
    2. Elroy Dimson & Paul Marsh & Mike Staunton, 2004. "Irrational Optimism," Financial Analysts Journal, Taylor & Francis Journals, vol. 60(1), pages 15-25, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    retirement planning; safe withdrawal rates; sequence of returns risk; retirement ruin; retiring in 2000; current withdrawal rate;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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