What doesn’t get as much press is the reverse, that is, spending those assets and making withdrawals from those various accounts. Why is that? Dr. Jim Dahle shares his views on the subject, saving what matters most for last.
Today, I’d like to discuss seven simple principles you need to know about withdrawing from your portfolio in retirement, the last of which is the very most important factor.
I know. It seems so obvious. But too many people have designed a retirement withdrawal plan that, if you look at it carefully, assumes they are immortal.
The second principle is to make sure that your withdrawal plan is in the right neighborhood. That neighborhood is four percent. The 4% rule of thumb was best publicized by the Trinity Study.
Another key principle to understand about withdrawal rates is that the longer the time period, the more important it is for your portfolio to continue to grow.
Here’s another thing people don’t seem to get about this. The data that all of these studies are based on is terrible. At most, it’s based on about 90 years worth of data.