Optimising Retirement Income


According to a recent survey (Blackrock, 2021) of American retirees most had 80% of their pre-retirement savings after almost two decades of retirement and one-third grew their assets over the course of retirement. Despite this comforting picture, there is concern (Merton, 2014) about a retirement crisis for recent and future retirees.

Table of Contents

  • Introduction
  • What do we want, what do we really want?
  • Withdrawal Rules
  •  Retirement Scenario
    • Scenario 1: Constant equity, constant withdrawals
    • Scenario 2: Constant equity, variable withdrawals
    • Scenario 3: Variable withdrawals with optimal control of the equity allocation
  • Optimal is personal
  • Performance During Retirement
  • Conclusion

This report was written by Graham Westmacott, PWL Capital Inc., Peter A. Forsyth, University of Waterloo, and Kenneth R. Vetzal, University of Waterloo. The ideas, opinions, and recommendations contained in this document are those of the authors and do not necessarily represent the views of PWL Capital Inc.