Retirement Withdrawals: What Rate Is Safe When Time Is Short and Uncertain?
by Carl M. Hubbard
How much can I withdraw? is the key question facing investors who are living off of their retirement savings. The dilemma is that if they withdraw too much, they prematurely exhaust the portfolio, but if they withdraw too little, they unnecessarily lower their standard of living.
Many financial studies have examined sustainable withdrawal rates to help answer this question. But most of this research covers payout periods that are typically 15 years to 35 years. The imagined scenario typically focuses on a 65-year old retiree who is planning withdrawals that allow the retirement portfolio to provide income for 15 years to 35 years.
However, circumstances of life arise that can shorten the expected payout period.
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