Four percent has long been the target savings withdrawal number for retirees, but two recent studies encourage seniors to take a more individualized approach to the numbers game.
It's also information that helps provide a framework for the long-term planning employees need to consider on the front end, as they find the best ways to pre-load for a survivable retirement.
Last year, a research paper in the Journal of Financial Planning predicted that a safe nest-egg withdrawal rate for retirements begun in 2010 is 1.8 percent. Within weeks of that report's appearance, a study in Retirement Management Journal made the case that a safe withdrawal rate for some individuals could be as much as 7 percent.
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So, what's a retiree to do? It all depends on how risk averse they are, but here are four prepartory steps to take: estimate your life span, assess market valuations at the time you retire, account for variables like inflation and investment fees and revisit your plan regularly. While no method is foolproof, these steps will help ensure that your plan is well-informed.
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