For Retirement Portfolios, a Smarter Glidepath

One of the core functions of financial planning is setting up clients’ portfolios in retirement so that resources are adequate to sustain the journey — no small feat, given the uncertainties involved and the need to balance stability and safety against the risk of inflation, as well as the need for growth over the potentially long time horizon.

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Comments (1)
It has always occurred to me that one methodology not employed by any of these studies to my knowledge is the use of high dividend large cap stocks in these safe withdrawal studies. Since a substantial portion of the actual real return on the market has been from dividends, I would think that a portfolio of high dividend large caps and Treasuries (or bills) would make an interesting counterpoint when looking at where the withdrawal actually comes from. A dividend in the 3-5% range would cover most if not all of a retiree's income need. And since dividends, in general, rise with inflation, wouldn't that obviate, or at least minimize, the need to continually increase the withdrawal over time? I for one would be interested in such a study given the current low interest rate environment which could last a very long time.
Posted by MITCHELL K | Tuesday, August 26 2014 at 5:35PM ET
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