Una evaluación de la regla de retiro del 4% para los ahorros pensionarios en México

Abstract

An evaluation of the 4% withdrawal rule for pension savings in Mexico

Objective: Evaluating the 4% withdrawal rule for personal pension saving funds in Mexico. Methods: Simulations based on the distributions of monthly real returns of assets and bonds (1989-2023). Results: Monte Carlo simulations indicate that the risk of failure (that is, exhausting the funds before 30 years) is minimized by investing only in bonds. However, investing in assets is required to maximize the probability of achieving a final fund balance goal. Recommendations: If the person wants to keep 50% of the initial fund balance after 30 years of withdrawals, then it is optimal to allocate 10% of the fund to stock and the rest to bonds. This strategy implies a small probability of failure (0.02%), and, in the worst-case scenario, the fund lasts 29 years. Limitations and implications: Simulations do not consider fees and taxes. Hence, investors should be cautious. Originality: The results contradict findings from the only previous study about Mexico. Conclusions: It is relatively safe to follow the 4% rule in Mexico, allocating a small fraction of the fund to assets.