AAII: The American Association of Individual Investors

A Key to a Lasting Retirement Portfolio

By John Sweeney
John Sweeney is an executive vice president with Fidelity Investments.

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If you're retired—or nearing it—ensuring that your retirement investment portfolio lasts your lifetime is critical. And that's not easy because by nature the stock market is volatile. What if a market downturn takes a bite out of your investment portfolio?

While you cannot completely control the market's impact on your portfolio, there are things you can control that can also make a signifi cant difference in how long your portfolio may last. One: your withdrawal rate from your portfolio. The amount you take can directly impact how long your assets could last in retirement.

But what about in difficult markets? At Fidelity, we still believe in inflation-adjusted withdrawal rates of no more than 4% to 5% a year for individuals who retire at age 65. That's because we did the analysis using our Retirement Income Planner and an infl ation-adjusted withdrawal rate of more than 5% steeply increased the risk of depleting retirement savings during an investor's lifetime. We also ran some further analysis to determine the influence of different market environments.


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