By Professor Rick Ulivi, Ph.D.
professor@ulivi.com
Website: www.ulivi.com
How much income can you afford to take out each year from your investments? This is a tough question for retiree’s because withdrawing too quickly leads to overspending and desperation, but not withdrawing enough at the appropriate time will not allow a retiree to enjoy all his/her savings thru retirement.
The right balance requires taking into account many variables, including a portfolio’s size, its expected rate of return, its volatility, inflation, longevity, income needs, and the withdrawal rate. Researchers estimate that, if you have a portfolio invested with a mix of stocks and bonds, you should be able to withdraw annually about 5%. This withdrawal rate should allow your income to keep up with inflation. (more…)