The QWeMA Group, a division of CANNEX, has patented its method for determining optimal retirement portfolio withdrawal rates in the face of longevity risk.
The company has been granted a patent by the United States Patent & Trademark Office. Professors Moshe Milevsky and Huaxiong Huang of York University developed the underlying withdrawal methodology.
Read: Compendium of sustainable withdrawal rates, part 1
The tool is meant to help retirees continuously evaluate and adjust their personalized portfolio withdrawal rate.
Some advisors rely on general rules and guidelines based on withdrawing a fixed percentage (such as 4%) of assets, regardless of an individual’s longevity or attitudes toward risk—potentially leading to sub-optimal results.
Read: Compendium of sustainable withdrawal rates, part 2
“With this patent, CANNEX is now able to create calculators that will determine a personalized withdrawal rate that not only takes into consideration an individual’s age and risk preferences, but also is consistent with the rational tradeoff between risk and return,” says Faisal Habib, president of QWeMA.
The full text of the Patent No. 8,781,937 is here.