Lesson 29 Sustainable Withdrawal Rates
The sustainable withdrawal rate is the percentage of the portfolio retirees can safely withdraw each year from their capital without running the risk of drawing it down to zero during their lifetime. That number is far lower than most people would guess. That means that you need more capital than you would assume in order to finance an abundant retirement.
Old Assumptions Are Hazardous to Your Wealth
The traditional financial planning assumption about retirement income generation goes something like this: Investors make 10% on average; they withdraw 6% per year; each year, the account balance and income grow by an average of 4%; the investors die rich, and their children receive a windfall. ...
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