17 May 2017
Japan faces many retirement challenges. People are living longer, interest rates are at zero, and most personal financial assets are parked in low-return bank deposits. Each of these characteristics lowers the portion of savings a retiree can withdraw each year while safely expecting savings to reach the end of retirement. This portion is commonly known as the “safe withdrawal rate.”
In this paper, we use historical returns to explore safe withdrawal rates, both in Japan and internationally. More importantly, we estimate safe withdrawal rates for Japanese investors based on our current return and risk expectations for Japan.