Improving Your Finances: The First Question You Should Ask About In-Retirement Withdrawal Rates

Striking the right balance between what's sustainable and what's livable is job 1. Striking the right balance between what's sustainable and what's livable is job 1. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=28099&elqTrackId=7e07a7c021144f4999e6cff7e3fe0f96&elq=486d3e8cd4b248b0b48c349581302082&elqaid=28099&elqat=1&elqCampaignId=12832) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] [The First Question You Should Ask About In-Retirement Withdrawal Rates]( Striking the right balance between what's sustainable and what's livable is job 1. If you follow retirement-planning matters, you've probably read your fair share of articles about that topic--and about the right withdrawal percentage generally. Several recent research pieces, including one from my colleague Amy Arnott, have asserted that 4% is probably too high, given the confluence of today's low bond yields and not-inexpensive equity valuations. That's an important point. But I'd argue that homing in on a specific percentage skips a key step in the process of crafting a durable withdrawal system. A better starting point when thinking about portfolio withdrawals is to determine your own tolerance for variation in your in-retirement cash flows. Are you seeking a withdrawal system that's much like the paycheck you earned while you were working--a fixed real-dollar withdrawal each year? Or are you OK with annual fluctuations in your annual withdrawal amounts, in line with your changing portfolio balance, if it helps improve the odds that your portfolio will last throughout a 25- to 30-year retirement? [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [Keep These Things in Mind During Tax Season]( 2020's not over--at least when it comes to taxes. [Read More]( [Bill Bernstein: We're Starting to See all of the Signs of a Bubble]( The author and investment advisor joins us for our 100th episode to discuss his new book, value stocks and inflation, and the current market environment. [Read More]( [Do Annuities Belong in Your Retirement Tool Kit?]( These vehicles can be bewildering. [Read More]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2021 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602