This article was posted on March 1, 2003.
While the Retire Early Study on Safe withdrawal Rates used 3-month commercial paper for the fixed income portion of the portfolio and the Trinity Study used long-term US Treasury bonds, both arrived at 100% survivable withdrawal rates that were very similiar. Texas-based financial planner Jaye Jarrett, looked at other fixed income alternatives in an attempt to improve the maximum 100% survivable withdrawal in a September 2001 study, see link: http://jjarrett.home.texas.net/resFixedIncomePortion.pdf
Comparing the two studies reveals some important differences.
The Jarrett Study used a shorter timeframe (the 1926-1999 Ibbotson data) than the 1871-2000 Shiller database used in the Retire Early study, but the results should give comfort to those looking for a basis for using a higher fixed income allocation. At least these asset allocations have been tested against both the Crash of 1929 and the Great Depression of the 1930's as well as the high inflation of the 1970's and early 80's.
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Copyright © 2003 John P. Greaney, All rights reserved.