Making Refinements to Your Portfolio Withdrawal

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Making Refinements to Your Portfolio Withdrawal

If you aren’t satisfied with the final dollar amount that you calculate for each year of retirement, see if you can change your withdrawal rate by altering your asset mix, your confidence level, or your number of years in retirement.

But the numbers will not stay the same

If you are satisfied with what you’ve found, congratulations! But, unfortunately, the work doesn’t end here. Your spending rates will probably change over time. Later in life, for example, you may be less active, and may therefore spend less on travel and entertainment. But you may need to spend more for medical attention. The key is to plan for flexibility.

Further, if these worst-case scenarios don’t materialize, you may leave a larger estate behind than you intended to.

To illustrate

For example, if you choose to be 95% sure that you’ll have enough money to last 20 years with an asset mix of 50% stocks, 35% bonds, 15% cash, and an initial portfolio balance of $1,000,000, there would be about a 50% chance that your final estate would top $800,000.

That’s just one reason why you’ll want to monitor and adjust your spending amounts throughout your retirement.