You’ve spent your whole life trying to understand how to save for retirement; we show you how to spend your money in retirement.
You’re probably wondering, “How much income can I safely take from my investments to sustain my retirement?”
To answer that question, we use academic research based on Bill Bengen’s original safe withdrawal rate article, published in 1994, and carried on by Michael Kitces’ research, 20 Years of Safe Withdrawal Rate Research.
Bengen’s academic framework examined how a retiree’s spending would be sustained by analyzing actual historical market sequences.
His research showed that a withdrawal rate of 4% of the initial account balance, adjusted for inflation, could survive any 30-year market sequence.
On a $500,000 portfolio, the 4% rule produces about $1,667 per month, and combined with Social Security, that number works for many people retiring at 65.
Combined with Social Security, a 4% withdrawal on $500,000 produces enough monthly income for many retirees to cover their core expenses comfortably.
Since Bengen’s 1994 article, numerous studies have expanded the safe withdrawal rate research to include other factors that make the safe withdrawal rate as high as 5.20% in some scenarios.
You will feel confident about how to spend your money in retirement while reducing your taxes.
