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Even with modest inflation rates of 2% to 3%, your $40,000 annual withdrawal from your $1 million nest egg won't stretch as far in 10 or 15 years as it did in your first year of retirement.
The problem with giving a general calculation of how long your specific retirement funds will last is that no rule will do this perfectly, including the 4% rule. Some drawbacks to the 4% rule include:
How long $1.5 million will last in retirement depends foremost on how quickly you spend money. If you have a steady and reasonable withdrawal rate and keep your portfolio invested in a safe and ...
The 4% retirement rule doesn't account for investment fees or taxes. Investment fees charged by financial advisors or mutual funds can eat into your returns and shorten how long your portfolio lasts.
To maintain the tax advantage for income deferred into a 401(k), the law stipulates the restriction that unless an exception applies, money must be kept in the plan or an equivalent tax deferred plan until the employee reaches 59 + 1 ⁄ 2 years of age. Money that is withdrawn prior to the age of 59 + 1 ⁄ 2 typically incurs a 10% penalty tax ...
1-in-2 working Americans underestimates their life expectancy by 5-plus years, resulting in skewed retirement income goals — how to make your money last in later life Maurie Backman September 26 ...
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Take the net interest income earned by the fund over the last 7 days and subtract 7 days of management fees. Divide that dollar amount by the average size of the fund's investments over the same 7 days. Multiply by 365/7 to give the 7-day SEC yield.