William P. Bengen is an author and a certified financial planner, who published what has come to be referred to as The Four Percent Drawdown rule for withdrawal rates from retirement savings (also referred to, idiomatically, as 'tapping into the Nest Egg').

Bengen conducted a number of empirical simulations of historical market behavior and concluded that a person could "draw down" up to 4 percent annually from their portfolio without fear of outliving their money. He published his research in the October 1994 issue of the Journal of Financial Planning. He subsequently published 3 additional papers in the same journal (see References). He is also the author of the book Conserving Client Portfolios During Retirement.

According to the Journal of Financial Planning, William P. Bengen, CFP

Certified Financial Planner

The Certified Financial Planner designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards, Inc...

, is a sole practitioner in Chula Vista/La Quinta, California, specializing in investment management.

The Four Percent Drawdown rule

Based on his early research of actual stock returns and retirement scenarios over the past 75 years, Bengen found that retirees who draw down no more than 4.2 percent of their portfolio in the initial year, and adjust that amount subsequent every year for inflation, stand a great chance their money will outlive them. In the same article, his analysis showed that "Retirees who draw down 5 percent a year run a 30 percent chance their nest egg will run out of steam before they do."

In his book titled 'The Number,' Lee Eisenberg has written in detail about 'the Four Percent Draw Down.'

Journal of Financial Planning Articles

Bill Bengen has published five articles in the Journals of Financial Planning. His October 1994 article, on calculating "safe" withdrawal rates and asset allocations based on historical data is the one that led to the formulation of the 4 four percent draw-down rule. The Journal reprinted this article in 2004, the journal's 25th anniversary, counting it among the best content of the Journal. For his other articles published in the same journal, see External Links & Further Reading section.

Bengen has also authored a comprehensive book on his research, titled "Conserving Client Portfolios During Retirement", published by FPA PRess in 2006. It updates and supplants all his earlier published research. An updated edition of the book is planned for release in 2013.

External Links & Further Reading

• William P. Bengen, Determining Withdrawal Rates Using Historical Data Journal of Financial Planning, October 1994, pp. 14–24.
• William P. Bengen, Asset Allocation for a Lifetime(pdf) Journal of Financial Planning, August 1996, pp. 58–67.
• William P. Bengen, Conserving Client Portfolios During Retirement, Part III Journal of Financial Planning, December 1997, pp. 84–97.
• William P. Bengen, Conserving Client Portfolios During Retirement, Part IV Journal of Financial Planning, May 2001.
• William P. Bengen, Baking a Withdrawal Plan 'Layer Cake' for Your Retirement Clients Journal of Financial Planning, August 2006.
• Review of Bengen's book: Conserving Client Portfolios During Retirement - by Gary W. Silverman