Portfolio Withdrawal Rules to Follow

Managing income during retirement can be difficult. How much can you safely withdraw from a retirement portfolio? Knowing the answer to this question will help you avoid spending your money too fast and, most importantly, will help you live comfortably during retirement. Set yourself up for success during retirement with our portfolio withdrawal rules to follow.

4% vs. 6% Withdrawal Rules

4% Withdrawals 6% Withdrawals
The 4% rule is the rule most financial planners use as a safe withdrawal rate, since the withdrawals would consist of mostly interest or dividends. I see 6% as a more reasonable withdrawal rate. If you have $100,000 and withdraw $500 per month, which is $6,000 per year, then account for 2% annual inflation for withdrawal needs. If you earn 8% per year, your final payout will be at age 120.
This is an amount that can be safely withdrawn assuming proper asset management. If 4% was earned and 6% withdrawn, your final monthly payout will be at age 87.4.

Portfolio Withdrawal Tip

Every year, you should determine how much you withdrew last year as a percentage of the asset. You can use the information to forecast the following year’s expected withdrawals and calculate the share of the total asset. If the percentage is over 6%, a new budget should be developed to reduce your spending.

Portfolio Management

Portfolios can be managed and held in your FMF365/Fidelity Investments account in any of our three stock-based or mutual fund–based strategies. Learn more and start investing today.