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In that scenario, a 4% withdrawal rate allowed the investor's funds to last 30 years. Historically, Bengen says closer to 7% is an average safe withdrawal rate and at other times withdrawal rates up to 13% have been feasible. [15] A 4% withdrawal rate is also one conclusion of the Trinity study (1998).
Assuming a 2% inflation rate, you'd withdraw $40,800 in year two, $41,616 in year three, and so on. The 4% retirement rule doesn't account for investment fees or taxes.
The 4% rule is a popular retirement withdrawal strategy that suggests retirees can safely withdraw the amount equal to 4% of ... Many factors influence the safe withdrawal rate such as risk ...
Morningstar’s research on the optimum initial safe withdrawal rate started in 2021 when the analysis recommended a 3.3% withdrawal rate. For 2022, that rate increased to 3.8%.
The new withdrawal rate is based on a conservative retirement savings portfolio that consists of 20% to 40% in stocks, 10% in cash, and the rest in bonds with a 30-year time horizon, according to ...
Financial planner William Bengen first identified the 4% rate as a sweet spot for safe withdrawals in 1994. Since then, the world — and retirement — has changed.