Withdrawals in Retirement and Portfolio Performance

For those of you interested in the interrelationship between during-retirement withdrawals and portfolio performance, please check out this article.  

The author nicely explains the issues with just having a brokerage account in retirement and assuming that a consistent withdrawal rate will be sufficient in all potential futures.  Most clients do not want to or literally cannot afford to spend substantially less money during down market years or cycles, and that is the only way to offset the potential pitfalls of the sequence risk this article addresses in retirement.  For many clients, this is why I heavily consider the use of annuities- essentially sharing the risk with an insurance company (for an added expense) that you would otherwise risk running out of money before your death.  The upshot of the article is that if you have good years early in your retirement you can afford bad years later on, but the opposite is also true - bad years early on in retirement usually cannot be offset by good years later on because the balance the good years act upon is too low to make a meaningful difference.  In the end, I am well aware of the ramifications of this article, and incorporate it into the advice I give to my clients.