- In This Article
- Overview
- Take control where you can
- Planning ahead
- How much to withdraw when funds decline
- How much will you get from Social Security?
- Where to stash your cash cushion
- Retirees
- Keeping the nest intact
- What you can do
- Pre-retired
- Work longer, keep saving
- What you can do
- Younger workers
- Follow the rules, keep the faith
- What you can do
- View all product nest egg
How much to withdraw when funds decline
To ensure that your retirement money lasts at least as long as you do, withdraw about 4 percent per year. The CR Money Lab examined three ways to deal with a nest egg that's 25 percent smaller. Using historical stock and bond returns over the past 82 years, we found that the higher the withdrawal rate and the more conservatively you invest, the sooner you'll run out of money. The older you are, the less impact a change of strategy will have. There's no guarantee, though, that your assets will grow at the rates we used.
AGE 60
| Plan specifics | The dream | Plan B: Withdraw at same rate | Plan C: Withdraw same amount | Plan D: Move to safer investments |
|---|---|---|---|---|
| Portfolio value | $600,000 | $450,000 | $450,000 | $450,000 |
| Withdrawal rate | 4% | 4% | 5.3% | 5.3% |
| Amount available | $24,000 | $18,000 | $24,000 | $24,000 |
| Money runs out at age … | 95+ | 95+ | 87 | 83 |
AGE 70
| Plan specifics | The dream | Plan B: Withdraw at same rate | Plan C: Withdraw same amount | Plan D: Move to safer investments |
|---|---|---|---|---|
| Portfolio value | $400,000 | $300,000 | $300,000 | $300,000 |
| Withdrawal rate | 4% | 4% | 5.3% | 5.3% |
| Amount available | $16,000 | $12,000 | $16,000 | $16,000 |
| Money runs out at age … | 95+ | 95+ | 95+ | 93 |
AGE 80
| Plan specifics | The dream | Plan B: Withdraw at same rate | Plan C: Withdraw same amount | Plan D: Move to safer investments |
|---|---|---|---|---|
| Portfolio value | $250,000 | $187,500 | $187,500 | $187,500 |
| Withdrawal rate | 4% | 4% | 5.3% | 5.3% |
| Amount available | $10,000 | $7,500 | $10,000 | $10,000 |
| Money runs out at age … | 95+ | 95+ | 95+ | 95+ |
Portfolio split between an investment in a large-cap stock index (60%) and long-term U.S. government bond index (40%). Calculations
assume an annual, inflation-adjusted rate of return equal to the average annual performance from 1926 through late 2008. Plan
D assumes a 40% stocks/60% bonds allocation. Note: Some figures have been rounded.
Posted: January 2009 — Consumer Reports Magazine issue: February 2009
