In summary, retirees and their financial advisors can greatly improve on the results delivered by the 4 percent rule through the following three-step process:
1) Determine a retiree's characteristics and objectives.
2) Enhance portfolio behavior through rules-based, quantitatively enabled tactical strategies that focus on downside capital protection.
3) Dynamically adjust withdrawals to coincide with the realized market path to both increase spending and peace of mind throughout retirement.
Corey Hoffstein is co-founder, chief investment officer and chief technology officer of Newfound Research, a financial technology and product innovation firm that works with clients to develop behavior-driven investment strategies.