William P. Bengen is one of those people who make very difficult things seem easy. In 1994, he answered a simple, but crucial, question that ended up modernizing the profession's thinking about retirement planning. Bengen developed the 4% drawdown rule, proposing that retirees could withdraw 4.2% of their portfolio in the initial year, with annual adjustments for inflation, and stand a reasonable chance that their portfolios would outlive them.

Bengen introduced his theory in "Determining Withdrawal Rates Using Historical Data," a landmark article that appeared in the October 1994 issue of Journal of Financial Planning. The article, one of three he wrote for the peer-reviewed publication of the Financial Planning Association (FPA), was met by clamorous praise. "Immediately, the level of response was 'this is one of the best papers we have ever seen,'" says Marv Tuttle, executive director of the Financial Planning Association and former editor of the journal. "It was cutting-edge research."

Bengen introduced the concept of sequence risk, the idea that a portfolio's returns during the first few years of an investor's retirement has a huge impact on his subsequent wealth. If an investor retires when a bull market is taking off, he is in a good position, but not if he retires at the onset of a bear market.

All this is from a sole practitioner in El Cajon, Calif., who oversees $50 million in client assets, and whose clients typically have between $500,000 and $4 million in investable assets? Probe a little deeper, though, and you will find an MIT-trained engineer who inherited and sold afamily business, and a tenacious investigator whose simple questions upended conventional assumptions about retirement portfolio management.

THE IMPACT

Bengen's work created a whole new financial planning subject-retirement income planning, now at the top of the industry's agenda. He has inspired younger financial planners like Michael Kitces, director of research for Columbia, Md.-based Pinnacle Advisory Group, and Jonathan Guyton, principal of Edina, Minn.-based Cornerstone Wealth Advisors, to do well-respected research in this area. Kitces credits Bengen for starting a must-have conversation in the profession. "I was simply trying to add to and build on the base that Bill had already created," Kitces says. "It is a central issue that everybody deals with in planning for our clients."

Until 1994, practitioner research was very rare. Now here was an answer to a central question in financial and retirement planning-how to turn a portfolio into an income stream-based on solid methodology, and it came from within the profession. To commemorate its 25th anniversary, the Journal of Financial Planning reprinted Bengen's article in 2004, counting his work among its all-time best. He expanded on his initial article by explaining how special situations affect the equation through what he called the layer cake approach, in which a client's special situations- each one being a layer-should be considered in calculating the most appropriate withdrawal rate. He turned his research into a book, Conserving Client Portfolios During Retirement, published in May 2006.

"Bill, pretty much all by himself, saved thousands of people from receiving bad advice," says Bob Veres, publisher of the Inside Information service for financial planners. "His work has led to investors' understanding of how to convert their pot of retirement money into income with some measure of safety."

Bengen's body of work is very straightforward. He has written for and has been quoted in pieces for The Wall Street Journal, Kiplinger's and NAPFA Advisor, the monthly magazine published by the National Association of Personal Financial Advisors. He has also been a featured speaker at several FPA conferences.

Despite all of the attention surrounding his work, though, Bengen is very low-key and likens his practice to that of a country doctor. He is available to his clients at all hours of the day, every day. Some of his clients have been with him for 20 years. "My clients were really the driving force behind my research," Bengen says. "They were the ones who asked me the questions, and I did not feel comfortable giving them vacant stares."

THE TOUGH CLIMB

Before Bengen presented his initial research to the FPA, financial planners did not have a solid rule of thumb for determining the best annual withdrawal rate. Before the 1980s, investors could still rely on company pensions and Social Security benefits to fund their retirements, and actuaries figured out how to make those funds last through retirement. As defined contribution plans, like 401(k) and 403(b), replaced traditional pensions, the burden of managing that money shifted to investors. In the early 1990s, much of the financial planning industry assumed that retired clients could safely withdraw between 6% and 10% of their funds annually.