Withdrawal rate is a key lever in retirement planning. Small differences can mean big changes in the target portfolio.
Compare rates in RetirementIt converts a yearly income target into a portfolio target. Lower rates are more conservative (bigger target). Higher rates are less conservative (smaller target).
For $60,000/year:
Run your plan at 3%, 4%, and 5%. If your plan only works at 5%, you may want to adjust spending, contributions, or retirement age.
It’s more conservative, but it requires a larger portfolio. The “best” rate depends on your flexibility and time horizon.
It’s a widely discussed rule of thumb based on historical data and assumptions, but it’s not guaranteed.
Some people do, especially with flexible spending. It generally increases the risk of running out during bad markets.
It’s simplified. Use it for scenario testing rather than exact forecasts.
Spending. Lower spending reduces the required portfolio dramatically.