July 13, 2023
Only 1 in 4 retirees recently surveyed said they are very confident they know how much to withdraw from their savings and investments in retirement.
This makes me so frustrated. Another way to view that statistic is that only 1 in 4 retirees isn’t stressed about if their money will outlast them. That’s the implicit issue behind withdrawals: how much can you safely withdraw and still have a high probability that if you live well into your 90s you will still have money to support that much older you?
It is my goal that every retiree be very confident about their withdrawal rate. Retirement is a time to enjoy yourself, not worry.
There are a few key considerations that play into determining your safe withdrawal rate.
As I explain in detail in The Ultimate Retirement Guide for 50+ (updated for 2023), there are a lot of moving pieces to make sure you never run out of money. As a very broad rule of thumb, if you start making withdrawals in your early 60s my advice is to aim to withdraw and spend no more than 3% or so of your account value in year one, and then adjust that amount for inflation each year. If you don’t start withdrawals until around age 70, 4% can work just fine. And if you have all your living costs covered by guaranteed income, more than 4% may be viable.