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    How Withdrawal Sequence Affects the Longevity and Risk of Retirees Portfolios: Additional Evidence

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    Author
    Weigand, Robert A.
    Irons, Robert
    Publisher
    Washburn University. School of Business
    Sponsor
    Kaw Valley Bank
    Date
    August 2007
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    Abstract
    We examine the effect of the withdrawal sequencing decision on the longevity of retirees' portfolios by comparing the strategy of consuming bond assets first with maintaining a 50/50 stock/bond portfolio and consuming stock assets first. Using a long time series of data, we find that consuming bonds first consistently extends investor portfolios, although in about ten percent of the cases the strategy does not outperform the other methods. We also identify a market signal that effectively predicts when a bonds-first strategy will produce the largest gains. Based on current values of the signal, it appears that retirees in 2007 should be cautious about consuming bond assets first, as the strategy is currently unlikely to result in the same extension of portfolio longevity as it has historically.
    URI
    https://wuir.washburn.edu/handle/10425/227
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