Question

1. What factors would cause one to increase the withdrawal rate? What factors would cause one to decrease the withdrawal rate?

Answer 1

Factors which should be considered in order to increase the withdrawal rate-

A. High interest rates on the savings and deposits.

B. The amount of guaranteed income is stable.

C. Lower stability of the income of the retiree

D. Lower returns assumptions which are used by the retiree

E. When the risk of the investment portfolio is very high.

one can decrease the withdrawal rate if he feels like his overall income is highly stable and the guaranteed income is also highly fluctuating and it is also leading to a stability in the economic situation and other aspects of macro environment because and the microenvironment will be highly stable one should not be withdrawing much because he can easily deal with his expenditures.