4% rule stands the test of time

However, the researchers stress that many factors can impact this calculation, such as age, health, lifestyle and spending requirements, as well as the size of the portfolio. In fact, sustainable withdrawal rates can bounce between 3 percent of a portfolio for more conservative investors with a longer time horizon to 8 percent. Within that range, investors have a "high probability of not exhausting assets during the specified time horizons."

Another factor to take into consideration is whether to weight the portfolio toward income generation or yield. With interest rates low, investors may swing in favor of high-dividend-yielding stocks or high-yield bonds. This approach, the Gerstein Fisher researchers warn, entails "excessive risk to investors."

The paper notes that in the majority of years between 1926 through 2012, the yield on a 50/50 stock/fixed income portfolio either neared or exceeded 4 percent. Further, when yields were less than 4 percent, the market nevertheless did well and the price-to-yield ratio was high. Consequently, liquidating some of the portfolio's equity holdings for cash to offset any income shortfall "should not be too difficult."

Therefore, for most retired investors, the best blueprint may be a total return strategy rather than an income-only plan. Such a tactic permits spending both from a portfolio's cash flows and from the potential increase in the portfolio's value, the Gerstein Fisher report concludes.

See also:

• The 4 percent myth
• 4 retirement income risks — and how to avoid them
• Retirement income: The only (right) way to create it