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Conserving Client Portfolios During Retirement Paperback – May 1, 2006
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As planners confront the dubious task of helping their clients to safely withdraw income for retirement, William Bengen may very well be a luminary. His just released Conserving Client Portfolios During Retirement, a from scratch attempt to confront this dilemma, is likely to take its place in the canon of financial planning literature. Some of the MIT trained rocket scientist cum planner's research has been previously published in the Journal of Financial Planning, but those chapters have been meticulously updated, and there is plenty of new material. Using Ibbottson market data that reaches back to 1926, Bengen deflty dissects the retirement withdrawal dilemma into manageable layers. He arrives at the usual 4.15 percent "safe" withdrawal rate, but then shows how it can be adapted to any number of client profiles. The book's real magic is how Bengen weaves asset allocation, time horizon and other variables into his dynamic and thorough research to suggest formulas and methods, rather than arbitrary answers, for planning any given client's retirement withdrawal strategy. As with any good methodology, the book's findings can be used on the fly to recalibrate a withdrawal strategy for clients whose needs change mid flight. For the bulk of planners, trained more for accumulation than distribution, the book provides more than technical analysis; Bengen suggests intelligent ways to incorporate these strategies into conversations with clients facing these formidable decisions. Especially helpful is Bengen's methodology for predicting the probability of a given strategy's success. Remarkably, Bengen presents his complex findings, clever charts and all, in as tight and succinct a package as one can find in financial literature. --Marshall Eckblad, Financial Planning magazine, July 2006, p. 22
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William Bengen, a Certified Financial Planner (CFP) of many years, wanted a statistical history to show his clients how their portfolios could vary during 30-odd years of retirement. Finding none available, he compiled his own. This book is the end result.
He begins with a basic portfolio and how it has varied statistically for retirees from the 1920's on. Each chapter introduces additional variables that affect a clients' portfolios. In the process many treasured financial principles are upheld while a few are surprisingly debunked. (Hint: 4% may not be best for some.)
Written by a professional CFP for professional CFP's, this is no Tom Clancy novel. Considering the subject, however, it is clear, well-written and very readable. (I would go further and add it is downright fascinating--though I should add the disclaimer that my interest might be motivated by conserving my own portfolio for the next 30-odd years.)
Because it is a book for professionals, it has a heavy price tag. For myself, a retiree active in my investments, the price is far cheaper than what a CFP would cost. Please note this is not a replacement for professional advice, particularly for those not fully comfortable with investing and financial planning.
Pros: 1) Valuable, enlightening--even indispensable--information on its specific subject matter; 2) Highly readable for a topic that could easily have been dense and dull
Cons: 1) Expensive--though for this retiree the price was well worth it; 2) Written for a narrow audience--professionals and financially astute (ahem) amateurs.
This book is probably worth more to me that every other book I have ever read on retirement planning (and I have read several dozen). Bill Bengen is a genius in the area of retirement planning and a pioneer in developing models to determine sustainable withdrawal rates. His work is considered by others (financial planners included) as the "gold standard". I cannot say enough about how much I learned from reading his book. It's simply a "must read".
You would be remiss (bordering on negligent) in not adding this tremendous work to your library.