Welcome!

News Feed Item

J.P. Morgan Releases "Breaking the 4% Rule," A Landmark Research Report That Lays the Groundwork For an Innovative Approach to Investing and Withdrawing Income in Retirement

NEW YORK, Feb. 27, 2014 /PRNewswire/ -- In a groundbreaking new study, J.P. Morgan researchers have developed a revolutionary new method for investing and withdrawing funds that improves the likelihood that retirees will be able to maintain their living standards, reduce the risk of running out of money and optimize their overall satisfaction. By creating a smarter and more personalized way to invest and withdraw money in retirement, this study, "Breaking the 4% Rule," lays the foundation for a dramatic shift in how people think about their retirement income strategy.

To read the executive summary of the report, visit http://bit.ly/1dw8CT7.

As a first step, this study identifies the shortcomings of conventional and more rigid withdrawal methods, particularly the well-known "4% Rule," which could expose retirees to unnecessary risks that they will outlive their retirement assets or, conversely, leave too much wealth untapped. In particular, J.P. Morgan's new "Dynamic Withdrawal Strategy" shows retirees and their advisors how they can adjust their withdrawal rates and portfolio allocations in response to changes in personal circumstances and preferences, as well as market conditions.    

"Beyond the inevitable comparisons to other methods, this research sets the stage for the first retirement income framework focused on the benefits of a dynamic approach to managing withdrawals and asset allocation in the context of maximizing retiree satisfaction," said Michael Falcon, Head of Retirement at J.P. Morgan Asset Management. "This unique strategy aims to incorporate the concept of 'lifetime utility' – or satisfaction – which defines retirement success as the fulfillment retirees gain from living life to the fullest while spending their retirement savings."

The Dynamic Withdrawal Strategy incorporates five distinct factors: (1) personal preferences for the amount and timing of withdrawals, (2) wealth and "lifetime retirement income," which the study defines as guaranteed income, such as social security, pensions and lifetime annuities, (3) age and life expectancy, (4) the randomness of markets and extreme events, and (5) the dynamic nature of each retiree's decision-making process.

"When all these factors are combined into a single, cohesive methodology, we can calculate an optimal withdrawal rate and asset allocation based on each retiree's unique profile," said Abdullah Sheikh, Vice President and Research Analyst for J.P. Morgan Asset Management's Asset Management Solutions-Global Multi-Asset Group.

This new research provides a framework that can be tailored to an individual's unique circumstances, preferences and appetite for risk. 

"The research that has gone into this strategy is specifically designed to help optimize the drawdown of each retiree's assets, enabling them to adjust withdrawal amounts and asset allocations in response to changing market conditions, personal circumstances and preferences," said Katherine Roy, J.P. Morgan Asset Management's Chief Retirement Strategist.

By creating this new patent-pending methodology, J.P. Morgan seeks to help retirees smooth out the unpredictable nature of future expenses and personal circumstances. By periodically adjusting withdrawal rates and asset allocations to changes in age, wealth, life expectancy and personal preferences, this framework requires retirees and their advisors to closely monitor their unique withdrawal strategies at least once a year.   

"This strategy offers retirees more confidence with respect to one of Americans' greatest financial needs and helps them make the most of their assets during their retirement years," Falcon added.

To read the executive summary of the report, visit http://bit.ly/1dw8CT7.

To read the full research report, visit http://bit.ly/NvrtaK.

About J.P. Morgan Asset Management – Retirement
J.P. Morgan Asset Management is a leading comprehensive retirement solutions provider dedicated to improving individual retirement outcomes. J.P. Morgan Retirement, with defined contribution assets under management of $109 billion, is a leading comprehensive retirement solutions provider dedicated to improving individual retirement outcomes. J.P. Morgan Retirement Plan Services provides bundled recordkeeping services to more than 2 million participants in more than 850 plans, representing more than $167 billion in retirement plan assets (as of December 31, 2013).  

About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under management of $1.6 trillion, is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high-net worth individuals in every major market throughout the world.  J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity.  JPMorgan Chase & Co. (NYSE: JPM), the parent company of J.P. Morgan Asset Management, is a leading global asset management firm with assets of approximately $2.4 trillion and operations in more than 60 countries.  Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

SOURCE J.P. Morgan Asset Management

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
For financial firms, the cloud is going to increasingly become a crucial part of dealing with customers over the next five years and beyond, particularly with the growing use and acceptance of virtual currencies. There are new data storage paradigms on the horizon that will deliver secure solutions for storing and moving sensitive financial data around the world without touching terrestrial networks. In his session at 20th Cloud Expo, Cliff Beek, President of Cloud Constellation Corporation, d...
Businesses and business units of all sizes can benefit from cloud computing, but many don't want the cost, performance and security concerns of public cloud nor the complexity of building their own private clouds. Today, some cloud vendors are using artificial intelligence (AI) to simplify cloud deployment and management. In his session at 20th Cloud Expo, Ajay Gulati, Co-founder and CEO of ZeroStack, discussed how AI can simplify cloud operations. He covered the following topics: why cloud mana...
As more and more companies are making the shift from on-premises to public cloud, the standard approach to DevOps is evolving. From encryption, compliance and regulations like GDPR, security in the cloud has become a hot topic. Many DevOps-focused companies have hired dedicated staff to fulfill these requirements, often creating further siloes, complexity and cost. This session aims to highlight existing DevOps cultural approaches, tooling and how security can be wrapped in every facet of the bu...
SYS-CON Events announced today that Golden Gate University will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Since 1901, non-profit Golden Gate University (GGU) has been helping adults achieve their professional goals by providing high quality, practice-based undergraduate and graduate educational programs in law, taxation, business and related professions. Many of its courses are taug...
DevOps at Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to w...
SYS-CON Events announced today that CAST Software will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CAST was founded more than 25 years ago to make the invisible visible. Built around the idea that even the best analytics on the market still leave blind spots for technical teams looking to deliver better software and prevent outages, CAST provides the software intelligence that matter ...
Vulnerability management is vital for large companies that need to secure containers across thousands of hosts, but many struggle to understand how exposed they are when they discover a new high security vulnerability. In his session at 21st Cloud Expo, John Morello, CTO of Twistlock, will address this pressing concern by introducing the concept of the “Vulnerability Risk Tree API,” which brings all the data together in a simple REST endpoint, allowing companies to easily grasp the severity of t...
Recently, WebRTC has a lot of eyes from market. The use cases of WebRTC are expanding - video chat, online education, online health care etc. Not only for human-to-human communication, but also IoT use cases such as machine to human use cases can be seen recently. One of the typical use-case is remote camera monitoring. With WebRTC, people can have interoperability and flexibility for deploying monitoring service. However, the benefit of WebRTC for IoT is not only its convenience and interopera...
Translating agile methodology into real-world best practices within the modern software factory has driven widespread DevOps adoption, yet much work remains to expand workflows and tooling across the enterprise. As models evolve from pockets of experimentation into wholescale organizational reinvention, practitioners find themselves challenged to incorporate the culture and architecture necessary to support DevOps at scale.
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
In his session at 20th Cloud Expo, Scott Davis, CTO of Embotics, discussed how automation can provide the dynamic management required to cost-effectively deliver microservices and container solutions at scale. He also discussed how flexible automation is the key to effectively bridging and seamlessly coordinating both IT and developer needs for component orchestration across disparate clouds – an increasingly important requirement at today’s multi-cloud enterprise.
In his session at @ThingsExpo, Dr. Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, presented the findings of a series of six detailed case studies of how large corporations are implementing IoT. The session explored how IoT has improved their economic performance, had major impacts on business models and resulted in impressive ROIs. The companies covered span manufacturing and services firms. He also explored servicification, how manufacturing firms shift from se...
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
IT organizations are moving to the cloud in hopes to approve efficiency, increase agility and save money. Migrating workloads might seem like a simple task, but what many businesses don’t realize is that application migration criteria differs across organizations, making it difficult for architects to arrive at an accurate TCO number. In his session at 21st Cloud Expo, Joe Kinsella, CTO of CloudHealth Technologies, will offer a systematic approach to understanding the TCO of a cloud application...