[1] It is one of a category of studies that attempt to determine "safe withdrawal rates" from retirement portfolios that contain stocks and thus grow (or shrink) irregularly over time.
The withdrawal regime is deemed to have failed if the portfolio is exhausted in less than thirty years and to have succeeded if there are unspent assets at the end of the period.
The authors backtested a number of stock/bond mixes and withdrawal rates against market data compiled by Ibbotson Associates covering the period from 1925 to 1995.
The authors make this qualification: The word planning is emphasized because of the great uncertainties in the stock and bond markets.
Mid-course corrections likely will be required, with the actual dollar amounts withdrawn adjusted downward or upward relative to the plan.
[3] Other authors have made similar studies using backtested and simulated market data, and other withdrawal systems and strategies.
[6] The procedure for determining a safe withdrawal rate from a retirement portfolio in these studies considers only the uncertainty arising from the future returns to be earned on the investment.
For instance, there is a small chance each period of an emergency arising that will require a large extra withdrawal that may be comparable in size to the loss from a financial bear market.