Recent reports indicate that there is less than %50 chance that the money saved in a person’s retirement account will not be enough to last over a 30 years at a 4% withdraw rate from a 40% stocks, 60% bonds portfolio. The success rate is suffering because of the market. Currently, the bond yields are at about 2% and high stock valuations. Experts are recommending that people decrease their withdrawl percentage to 2% so that the funds will last. The situation may not be as bad as it seems. The study does not take into account how close to the 30 years you get to so if you ran out of money on the 30 year eve then you failed. Additionally, there is a possibility that you will not need money for 30 years. According to Michael Finke, a professor and Ph.D. in personal financial planning at Texas Tech University, there is a 20% chance that only one spouse will be alive during the shortage. So even with a 50% chance that the money saved will not be enough to last 30 years, there is only a 10% chance that the retiree will run out of funds.
See Robert Powell, Odds You’ll Save Enough To Retire 50/50, Market Watch, Jul.3, 2013.
