William P. Bengen is a retired financial adviser who first articulated the 4% withdrawal rate ("Four percent rule") as a rule of thumb for withdrawal rates from retirement savings;[1] it is eponymously known as the "Bengen rule".[2] The rule was later further popularized by the Trinity study (1998), based on the same data and similar analysis. Bengen later called this rate the SAFEMAX rate, for "the maximum 'safe' historical withdrawal rate",[3] and later revised it to 4.5% if tax-free and 4.1% for taxable.[4] In low-inflation economic environments the rate may even be higher.[5][6][7]
Bengen conducted a number of empirical simulations of historical market behavior and concluded that a person could "draw down", withdraw, up to 4 percent annually from their portfolio without fear of outliving their money. He published his research in the October 1994 issue of the Journal of Financial Planning.[8]: 46 He is also the author of the book Conserving Client Portfolios During Retirement, where he revised and updated his analysis.[4] He gave a brief updating in Bengen (2012).
The withdrawal rate has since become a staple of the financial service industry, adopted by several major financial firms.
CareerEdit
Early life and educationEdit
A native of Brooklyn, born in 1947,[a] Bengen received a B.S. from MIT in aeronautics and astronautics. He is a co-author of Topics in Advanced Model Rocketry, originally published by the MIT Press in 1973.[10] He worked for 17 years with his family-owned soft-drink-bottling franchise firm in the New York metropolitan area, during which he served tenure as president and COO; the company was sold in 1987.[2]
Financial careerEdit
Following the sale of the family business, Bengen moved to Southern California and began a Certified Financial Planner practice, Bengen Financial Services, earning his certification in 1990 and his master's degree in financial planning in 1993. He ran the firm as a fee-only (no commission) practice for twenty years, then sold the firm and retired in 2013.[9]
The Four Percent Drawdown ruleEdit
Based on his early research of actual stock returns and retirement scenarios over the past 75 years, Bengen found that retirees who draw down no more than 4.2 percent of their portfolio in the initial year, and adjust that amount every subsequent year for inflation, stand a great chance that their money will outlive them.[11][12]
The 4% Rule is sometimes also called the Rule of 300.[13]
Criticism of the 4% withdrawal rule include references to its assumption of one's investment portfolio, the differences in historical and current interest rates, as well as the reality that most people's spending habits are not consistently linear.
^Bengen, William (2020-12-17). "Bill Bengen Revisits The 4% Rule Using Shiller's CAPE Ratio, Michael Kitces's Research". FA Magazine.
^Bengen, William (2020-10-01). "Choosing The Highest Safe Withdrawal Rate At Retirement". FA Magazine.
^Kitces, Michael (2020-10-13). "Financial Advisor Success Podcast Ep 198: How The Creator Of The 4 Percent Rule Applied It For His Clients And His Own Retirement, With Bill Bengen".
^Birken, Emily Guy (2014). The Five Years Before You Retire: Retirement Planning When You Need It the Most. Adams Media. ISBN9781440569722.
^ abSimonoff, Evan (2013-09-18). "Bill Bengen, Creator Of The 4% Retirement Rule, Sells Firm And Retires". Financial Advisor.
^Nelson, Colin (2006). When Can I Tell My Boss, I Quit! : Seven Lessons for Financial and Personal Rebirth in Retirement. iUniverse. p. 122. ISBN9780595827350.
^Ang, Andrew (2014). Asset Management: A Systematic Approach to Factor Investing. Oxford UP. p. 179. ISBN9780199382316.
^Kuten, Thibault (2020-01-24). "The Rule of 300: The Best Way to Retire". Finance Friday.
Further readingEdit
Mercado, Darla (2013-06-06). "15 transformational advisers: William P. Bengen".
August 30, 2023
william, bengen, william, bengen, retired, financial, adviser, first, articulated, withdrawal, rate, four, percent, rule, rule, thumb, withdrawal, rates, from, retirement, savings, eponymously, known, bengen, rule, rule, later, further, popularized, trinity, s. William P Bengen is a retired financial adviser who first articulated the 4 withdrawal rate Four percent rule as a rule of thumb for withdrawal rates from retirement savings 1 it is eponymously known as the Bengen rule 2 The rule was later further popularized by the Trinity study 1998 based on the same data and similar analysis Bengen later called this rate the SAFEMAX rate for the maximum safe historical withdrawal rate 3 and later revised it to 4 5 if tax free and 4 1 for taxable 4 In low inflation economic environments the rate may even be higher 5 6 7 Contents 1 Withdrawal rate 2 Career 2 1 Early life and education 2 2 Financial career 3 The Four Percent Drawdown rule 4 Notes 5 References 6 Further readingWithdrawal rate EditMain article Withdrawal rate Bengen conducted a number of empirical simulations of historical market behavior and concluded that a person could draw down withdraw up to 4 percent annually from their portfolio without fear of outliving their money He published his research in the October 1994 issue of the Journal of Financial Planning 8 46 He is also the author of the book Conserving Client Portfolios During Retirement where he revised and updated his analysis 4 He gave a brief updating in Bengen 2012 The withdrawal rate has since become a staple of the financial service industry adopted by several major financial firms Career EditEarly life and education Edit A native of Brooklyn born in 1947 a Bengen received a B S from MIT in aeronautics and astronautics He is a co author of Topics in Advanced Model Rocketry originally published by the MIT Press in 1973 10 He worked for 17 years with his family owned soft drink bottling franchise firm in the New York metropolitan area during which he served tenure as president and COO the company was sold in 1987 2 Financial career Edit Following the sale of the family business Bengen moved to Southern California and began a Certified Financial Planner practice Bengen Financial Services earning his certification in 1990 and his master s degree in financial planning in 1993 He ran the firm as a fee only no commission practice for twenty years then sold the firm and retired in 2013 9 The Four Percent Drawdown rule EditBased on his early research of actual stock returns and retirement scenarios over the past 75 years Bengen found that retirees who draw down no more than 4 2 percent of their portfolio in the initial year and adjust that amount every subsequent year for inflation stand a great chance that their money will outlive them 11 12 The 4 Rule is sometimes also called the Rule of 300 13 Criticism of the 4 withdrawal rule include references to its assumption of one s investment portfolio the differences in historical and current interest rates as well as the reality that most people s spending habits are not consistently linear Notes Edit Turned 66 in 2013 October 9 References Edit Bengen William P October 1994 Determining Withdrawal Rates Using Historical Data PDF Journal of Financial Planning 14 24 a b Barrett William P 2011 05 04 The Retirement Spending Solution Forbes Bengen Bill 2012 05 01 How Much Is Enough FA Magazine Charter Financial Publishing Network a b Bengen William P 2006 Conserving Client Portfolios During Retirement Paperback ISBN 978 0 97534483 5 Bengen William 2020 12 17 Bill Bengen Revisits The 4 Rule Using Shiller s CAPE Ratio Michael Kitces s Research FA Magazine Bengen William 2020 10 01 Choosing The Highest Safe Withdrawal Rate At Retirement FA Magazine Kitces Michael 2020 10 13 Financial Advisor Success Podcast Ep 198 How The Creator Of The 4 Percent Rule Applied It For His Clients And His Own Retirement With Bill Bengen Birken Emily Guy 2014 The Five Years Before You Retire Retirement Planning When You Need It the Most Adams Media ISBN 9781440569722 a b Simonoff Evan 2013 09 18 Bill Bengen Creator Of The 4 Retirement Rule Sells Firm And Retires Financial Advisor DSpace MIT Topics in advanced model rocketry Nelson Colin 2006 When Can I Tell My Boss I Quit Seven Lessons for Financial and Personal Rebirth in Retirement iUniverse p 122 ISBN 9780595827350 Ang Andrew 2014 Asset Management A Systematic Approach to Factor Investing Oxford UP p 179 ISBN 9780199382316 Kuten Thibault 2020 01 24 The Rule of 300 The Best Way to Retire Finance Friday Further reading EditMercado Darla 2013 06 06 15 transformational advisers William P Bengen Retrieved from https en wikipedia org w index php title William Bengen amp oldid 1149887266, wikipedia, wiki, book, books, library,
