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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:
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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.
By the year 2050, more than 1 in 6 people are projected to be at least 65 years old. [8] The following statistics emphasize the importance of a well-planned retirement spend-down strategy for these people: 87% of workers do not feel very confident about having enough money to retire comfortably. [9]
If all the money had been invested at the beginning of Year 1, the return by any measure would most likely have been 50%. $1,500 would have grown by 100% to $3,000 at the end of Year 1, and then declined by 25% to $2,250 at the end of Year 2, resulting in an overall gain of $750, i.e. 50% of $1,500. The difference is a matter of perspective.
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Continue reading → The post Fidelity's Six Year-end Money Moves You Shouldn't Forget appeared first on SmartAsset Blog. As 2022 draws to a close, it's an excellent time to make important year ...