| Spotlight: Bud Hebeler |
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 Another retirement myth you cite is that there are safe portfolio withdrawal limits. It's widely believed that a 4 percent withdrawal rate each year is pretty safe. Is this a false assumption?
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| Savings myths and realities |
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 It's not a false assumption if history repeats itself. If the returns in the future have the same kinds of statistical distributions that you had in the past, then I think that's a pretty safe number.
Now, if you're going to retire at 80 years old, you could actually have a bigger number than 4 percent. If you're going to retire around 65 or so, 4 percent is not a bad number. Some people are now saying 3.5 percent instead of 4 percent. If you're going to retire at 55, you'd better spend a lot less than 4 percent because you've got another 10 years of life that you're going to have to support.
People should start thinking about retirement as being something like a quarter or up to a third of their life. They therefore have, at most, half of their life to earn the money to support the rest of it. When they start thinking about that in those kinds of terms, I think they'll start saving more money.
You advocate shifting into more conservative investments as people get older. Yet many financial experts say that people should have stock market exposure so they have growth in their portfolio. How much of one's portfolio should be devoted to fixed income versus stocks during retirement?
Again, if dealing with the future is sort of like the past, in my view, and this is what I did, subtract your age from 100. So if you're 60, you would have 40 percent in stocks probably as the minimum and you might go up higher than that to 40 (percent) to 50 percent. So what you do is use your age as a guide. So at 70 you're at 30 percent in stock, when you're 80 you might have 20 percent in stock. Plus let it go up another 10 percent.
Maybe every other year I might have had to rebalance my portfolio.
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