8 rules of thumb on saving and retirement

Retirement withdrawals
5 of 10

The rule: To make sure your retirement lasts, never withdraw more than 4 percent a year.

Why it works: This simple formula has proven accurate over time, helping people easily figure out a guideline for how much they should withdraw so as not to exhaust their retirement savings, says Baughman.

Grain of salt: Be sure to track how your portfolio is doing. If it takes a hit, adjust your withdrawals downward. Withdrawing 4 percent of what your portfolio used to be worth is a good way to deplete it quickly, says Pomeranz.

Finke says another potential danger is that you won't live long enough to justify withdrawing only 4 percent of your savings, and that you'll miss out on taking vacations, making charitable contributions and giving gifts to family members. Finke says a better solution may be to use part of your retirement funds to buy an annuity or other insurance product to provide a base of lifelong income, allowing you to draw from your retirement funds more freely.




Show Bankrate's community sharing policy
          Connect with us

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.


Jennie Phipps

Annuity strategy to keep income flowing

Annuities can augment Social Security as a guaranteed source of retirement income to cover the basics.  ... Read more

Partner Center

Connect with us