New retiree withdrawal rate: Goodbye 4%, hello age divided by 20
How much can you safely withdraw from your retirement account each year without running out?
Well, in the good old days, you could withdraw 4% per year from your nest egg and it would last 30 years. Or at least that’s what financial planner Bill Bengen so famously wrote some 22 years ago. But now, in a world where interest rates float around zero and where investment returns are likely to be low for some time to come, blindly withdrawing 4% per year would be a disaster for your nest egg, and ultimately your standard of living.
So how might you determine a safe percentage of savings to spend in today’s world?
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