And on retirement we face the difficulty of choosing an appropriate withdrawal and investment strategy — one which ensures an acceptable standard of living, while at the same time reducing the risk of running out of money.

By making realistic assumptions regarding the expected returns and risks for equities and bonds, as well as the costs involved, we are able to help answer two critical questions:

1. How long will my retirement savings last?

2. How likely am I to have sufficient funds to last for the remainder of my life?

Have a look at the table below to get an idea of the answer to the first question.

We consider the number of years after retirement that our money is likely to last, given certain withdrawal rates and equity allocations.

As we all wish to maintain our standard of living through time, we define the withdrawal rate as the percentage of initial capital withdrawn after we retire, and increase that amount every year by the rate of inflation.

As the regulated withdrawal limits for annuitants is between 2.5 percent and 17.5 percent of fund value per annum, these will form the upper and lower limit for our withdrawal rates.

Expected Withdrawal Period in Years

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