What is a "safe" amount to withdraw in retirement?

September 23, 2021

Question: Chris from Florence: How much do you suggest is a "safe" amount to withdraw in retirement? Does 4% still work?

A: You’re referring to the much-referenced "4% rule" that says, over the course of 30 years, you can withdraw up to 4% a year (while adjusting for inflation annually) and not run out of money. And the truth is, that approach might work – or it might not.

As with most anything in the world of investing, the devil is in the details. The 4% rule assumes you have about a 60% stock/40% bond investment mix. It also assumes your retirement spending stays about the same throughout retirement. And last but not least, it was created during a time (the early 1990s) when bonds were producing much more income than what we’re seeing these days.