After spending a lifetime saving for retirement, the last thing you want to risk is running out of money while you’re still alive.
And having a strategic withdrawal strategy could lower that risk
For years, financial experts have been quick to suggest using the 4% rule. It has you withdrawing 4% of your savings your first year of retirement and adjusting future withdrawals to keep up with inflation. Here’s how it might work in theory.
If you retire with $1 million, you’d withdraw $40,000 your first year of retirement. If inflation rises 3%, your next withdrawal would be $41,200 the following year. The 4% rule has been tested against historic economic and market conditions.