From the course: Planning for Retirement
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Retirement account withdrawal rate
From the course: Planning for Retirement
Retirement account withdrawal rate
- After spending so many years saving and investing for retirement, you might be wondering how it looks to actually take money out of your portfolio in retirement. The amount you take from your portfolio each year in retirement is called your withdrawal rate. If your withdrawal rate is too high, you risk running out of money too soon. But if it's too low, you might miss out on experiences in retirement, which isn't great either. So what's the sweet spot? A great rule of thumb as you think about how much you can take out of your portfolio each year in retirement is called the 4% rule. The 4% rule says that you should be able to take out 4% of your portfolio each year in retirement, and it assumes that your withdrawals will need to be a little bit higher each year to account for inflation. By using the 4% rule, you should have a very low probability of running out of money over a 30 year retirement. So let's look at an…
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