How Much To Withdraw From Retirement Savings

This is a question we often get from our clients who are either retired or nearing their golden years. Obviously the answer is not a “one-size fits all” solution as needs and objectives differ from person to person. Factors like future cash flow needs and minimizing tax liabilities will weigh into this decision making process. The “4%” rule has been commonly used to determine the right amount of money to withdraw from your retirement portfolio each year. The rule is based on a theory that says if you withdraw 4.5% of your retirement funds each year, adjusted for inflation, your money should last 30 years.

In today’s investment environment where portfolios are earning less than half of what they have traditionally, combined with Americans living longer, the “4%” rule might not necessarily hold true any more. This article from Forbes exams why this rule of thumb needs to be rethought and the factors that need to be considered to determine the optimal amount of annual retirement withdrawals.
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