Equity Glide Path and Sequence of Return Risks

Being new to retirement issues, I find this area very interesting.

A counterintuitive idea is to increase the equity glide path once retirement hits, ie. increase equity exposure over time. Start at say 20% equity exposure and increase it 1% or 2% per year (by redeeming cash/bonds for withdrawals). One of the benefits of such an approach is not getting caught out on the sequence of risk issue associated with poor equity returns early in retirement. I kinda like that idea. (but only in a high valuation environment)

"These results indicate that the optimal equity glide path (as well as the decision about whether to use T-bills or bonds) is in fact quite sensitive to the market valuation at the start of retirement (and indirectly, to expected market returns). While the accelerated rising equity glide path worked best in some scenarios, the fixed 60% equity portfolio did better in most. The rising equity glide path should only be considered in unfavorable valuation environments. Notably, though, the “traditional” steady declining equity glide path is still inferior to some other strategy in all valuation environments. Based on historical data, more aggressive portfolios are rewarded in favorable (undervalued) and neutral environments, and rising equity glide paths performed better in unfavorable market environments, which were the situations that generated the overall historical SafeMax."

Definitely food for thought.