The Impact of the 2008 Financial Crisis on Withdrawals of Retirement Wealth

During the financial crisis of 2008, the market value of retirement assets held in stock fell by 32 percent. The objective of this study is to show how a severe financial crisis affects the withdrawal patterns of retirees. Specifically, we examine how withdrawal patterns change when we artificially induce an unexpected major investment shock at various years into retirement. The results show that equally weighted portfolio of stocks and bonds performs better than a portfolio of 100% stock or a portfolio of 100% bonds by providing a more stable withdrawal patterns