How Much Can I REALLY Withdraw From My Retirement Portfolio?! (and how long will it last?!)

(don’t forget to checkout the video of this blog too)

You often hear about the The 4% Rule which is really the gold standard in Retirement Income Planning…

But that’s if you’re optimizing for a 30-year income stream.

What if you only need income for 10 or 20 years?

Then you should be able to safely take a higher income withdrawal than 4% per year, right⁉️

And most people have other sources of retirement income that they can activate later in retirement, like Social Security (which I think often makes sense to delay).

You may even have a pension or an income annuity that you can allow to grow at a guaranteed rate until it makes sense to activate.

Either way, growing sources of guaranteed income shorten your time horizon for how long your flexible, or supplemental income has to last…

Which means you can INCREASE your withdrawal rate significantly!

Let’s look at 2 scenarios:

⭐️ $500k earning 4% per year ⭐️

(while taking income)

✅ 5% or $25k/year = 38+ years

✅ 8% or $40k/year = 16+ years

✅ 10% or $50k/year = 12+ years

✅ 15% or $75k/year = 7+ years

Now let’s assume our investment return increases from 4% to 6% per year.

⭐️ $500k earning 6% per year ⭐️

(while taking income)

✅ 5% or $25k/year = unlimited years

✅ 8% or $40k/year = 21+ years

✅ 10% or $50k/year = 14+ years

✅ 15% or $75k/year = 8+ years

These numbers work when you especially well when you utilize fixed rate financial vehicles while withdrawing income….

Meaning interest rates are high.

Following this same philosophy utilizing the market can achieve higher returns and therefore better results…

But, you are also exposing yourself to sequence-of-return risk…

Which just means withdrawing income when the market is dropping can accelerate the depletion of your retirement portfolio.

Causing your risk of running out of money in retirement to increase.

Let’s Chat 💬😎