Let's consider an example to see how this works. Assume you have a Methuselah client who would like to make withdrawals for 50 years without exhausting her portfolio. From Chart 1, you learn that the maximum safe withdrawal rate for the first year is about 3.7%. So, if the client has a \$1 million portfolio and wants to be safe, she should withdraw no more than \$37,000 the first year. That corresponds to the first line in Table 1.

However, let's say your Methuselah client is more aggressive, and wants to withdraw 5%, or \$50,000, the first year. That's about 35% more than the safe withdrawal level of 3.7%. Table 1 tells you that a 35% increase over the safe withdrawal rate is accompanied by only a 61% chance of success-that is to say, the probability of her exhausting her portfolio before 50 years is almost 40%. She can then determine her comfort level with those odds.

Using Table 1 and Chart 1 in tandem this way, you don't even need the probability charts to determine the odds of success of a particular withdrawal strategy. However, the probability charts contain another vital piece of information-the "worst case" longevity for a particular withdrawal rate. For example, on Chart 2 you can see that a retiree withdrawing 5% the first year and increasing the withdrawal amount for inflation each year could run out of money in only 20 years-quite a bit less than the planned 75 years.

Note that the worst case bars are the same on all probability charts, for any given withdrawal rate. Thus, you need only one probability chart to demonstrate the worst case longevity possibilities.

Wealth Building For Methuselahs

It is truly fascinating to consider the consequences of wealth accumulated by an individual not just over 30 years, but also over 50 or 75 years. The power of compounding can generate tremendous wealth, even in the face of withdrawals.

Consider the wealth accumulated by our 86 retirees. I looked at the value of their portfolios (which begin at \$100,000) after 30, 50 and 75 years respectively. During retirement, each portfolio is subjected to the appropriate maximum safe withdrawal percentage we learned in Chart 1: that is, 3.5% for the 75-year portfolio, 3.7% for the 50-year portfolio and about 4.1% for the 30-year portfolio.

The wealth accumulated is truly staggering. Many of the 75-year investors increased their wealth over a thousandfold, from \$100,000 to \$100 million. A few had as much as \$200 million!

Of course, with such vast wealth accumulation, perhaps Methuse-lah clients will eventually be tempted to increase their annual withdrawals just a teensy bit! But seriously, the impact of such wealth on planning for the estate tax, charitable gifting and many other aspects of financial planning will be enormous. The Methuselah client might well force a re-thinking of many of our ideas on wealth management. Perhaps never again, when asked by a client if he can buy something he clearly cannot now afford, will a planner be able to counsel: "Not in your lifetime."

William P. Bengen is owner of Bengen Financial Services, Inc. in El Cajon, Calif.