Withdrawal Strategies That Will Make Your Money Last

On the 57th episode of the Retirement Explained show, we’re discussing how to tap into your retirement savings with a plan and to make sure it lasts.

For many people, pensions are a thing of the past, so depending on your retirement savings as a source of income is paramount. Here are strategies to consider when approaching using your nest-egg as an income source during your retirement years.

The 4% Withdrawal Rule

The 4% withdrawal rule is an easy shortcut to use when trying to determine how much income your savings can produce for you without putting it under so much stress that it can’t be sustained.

For instance, if you had one million dollars saved, you could take $40,000/year in income while most likely not overdoing it.

Keep the phrase “shear the sheep, don’t skin the sheep” in mind when considering the 4% rule.

Don’t Treat Your Savings Like a Piggy Bank

Many retirees end up taking money out of their accounts as needed and not taking withdrawals systematically throughout time.

We think taking systematic and fixed withdrawals is better than taking money out randomly and in varying amounts because, like entering markets using the Dollar Cost Averaging strategy, taking withdrawals using a Dollar Cost Averaging strategy helps to spread your market exits over time, limiting instance where you’re withdrawing money/exiting markets during a downturn.

Consider Guaranteed Income

Annuities don’t have a to be a problem…they’re a tool like anything else. With pensions becoming a thing of the past, an annuity is really the only place to go to find guaranteed income that’s similar to a pension.

-Brian