PwC has developed models to help investors and their advisors understand how prepared they are for retirement. Rao said the firm is also developing tools that mass market investors can use to determine how to draw down their savings. "The approach has to be much more personalized," he said.
Michael Lonier, a financial advisor in Ramsey, N.J., who PwC acknowledges helped with the research, has a plan for helping his clients develop what he calls a dynamic spending process. He believes clients need to keep assets dedicated to their retirement needs invested in lower-risk assets such as bonds and annuities. On top of those funds is discretionary money. That is the only money Lonier would recommend that clients invest in anything with meaningful risk, like the stock market.
As for drawdowns, he recommends "an actuarial view of the length of the plan remaining," or a calculation of how long a client's money has to last. Then he looks at clients' current balance net of recent market performance, and from there he can calculate how much is safe to draw down for a given time period. "If you do the household math, then you have a better sense of how much risk you are taking and whether it's a good idea," he said.
Elvin Turner, managing director of Turner Consulting, a financial services consultancy, said the new research on the 4 percent rule also points to the fact that firms can use big data to better understand how people accumulate and spend their savings, and thus develop better plans for them. "The tools are much more sophisticated today."
That's a good thing, he said, because people facing retirement today are looking at a much more complicated financial situation. "There is no longer a one-size-fits-all strategy," he said.