Trouble ahead for drawdown?

12th March 2018

Another amazing, but rather depressing, presentation. This time from David Blanchett at Morningstar. Basically, he convinced me – and I guess many others – that taking retirement drawdown of 4% on the basis of Bengen’s “Rule” was a very high-risk strategy. I’ve written about this before and I am sure he is right.

  1. Bengen’s “Rule” was about the maximum not the optimum
  2. The US market data behind it identified about 5% annual return. The similar data for the UK was about 4%
  3. Bengen’s numbers excluded fees. In the UK, they can create a 2% drag

Following the meeting I had a couple of drinks with Clive Waller; in my opinion, one of the genuine gurus in this market.

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