From a success rate perspective, the rising equity glidepath was consistently inferior to a constant allocation in many scenarios using lower than historical returns or a higher (5 percent) initial withdrawal rate. (Tables 3,4,and 5)
By my reading, the study does not make the case that a rising equity glidepath will produce a dramatically better result. It does suggest some improvement appears possible, particularly for conservative spending patterns.
Finally, pay attention to the work of these two gentlemen because it is clear that they are doing studies with financial planners in mind and not just for the academic exercise. As the authors point out, they are modeled a gradual increase in equities expressly because they believe implementing in this way could be more palatable in the real world than a more sudden shift to equities.
I’m looking forward to the additional research they allude to, such as examining different schedules of changing allocations, viewing the issue over a full lifetime of accumulation and decumulation, and assessing a valuation overlay.
Dan Moisand, CFP, has been featured as one of the America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines. He practices in Melbourne, Fla. You can reach him at [email protected]