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Portfolios 310: How to Withdraw from Your Portfolio in Retirement

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1.
How do most retirees cover their expenses?
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With a combination of their investments and fixed sources of income. The more fixed sources of income you have, the lower your withdrawal rate can be.
2.
To find out how long you will be using your retirement portfolio, you need to ______.
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Subtract your expected retirement age from your life expectancy. This is the simplest way to do it.
3.
To add up the value of your retirement portfolio so that you can determine how much to spend each year, you should include _______.
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All taxable and tax-deferred accounts. You should ideally include all from both types, since this is when you will be using up your money.
4.
If you aren't satisfied with your withdrawal rate from your portfolio, what can you do?
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Accept a lower confidence level. You can also put off retirement or adjust your asset mix to possibly increase your withdrawal rate.
5.
Which statement is true?
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Your spending rates in retirement will likely change over time. Your spending rates may rise or fall. That's why you'll need to monitor and adjust your spending amounts throughout your retirement.
6.
In terms of portfolio withdrawal, what does a 50% confidence level mean?
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There's a 50% chance that your portfolio will expire before you do. For some, a 95% or 100% confidence level is crucial: You want your withdrawal rate to survive most worst-case scenarios. Others may accept a lower probability of success.