Spending Those Retirement Savings

August 15th, 2008 by Jim Cotterman

Much effort is made to encourage a work career of disciplined retirement saving using proper investment techniques.  Now that Boomers are approaching retirement it might be a good time to think about how to make those savings last a lifetime or two.  This is the central concern of many retirees and a significant concern for those approaching that milestone.

The accepted rule of thumb suggests a 4% withdrawal rate will safely provide for a thirty year retirement.  This level of understanding may be sufficient for much of your work life.  However, as you near retirement a deeper appreciation of the assumptions and variables is prudent.  A three decade retirement will likely require many course corrections along the way to navigate the vagaries of investment markets, inflation and government policy.

A number of articles have been written on safe withdrawal rates.  A new entry by William Reichenstein, CFA, provides a solid review of two prior works and what can be learned from the numerous studies on this topic.  The article appeared in the July issue of AAII (American Association of Individual Investors) and is entitled Will Your Savings Last?  What the Withdrawal Rate Studies Show

This entry was posted on Friday, August 15th, 2008 at 9:44 am and is filed under Retirement. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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