A new Morningstar report found that the safe starting withdrawal rate for retirees from a balanced portfolio has risen in the past year and investigates a variety of withdrawal strategies to determine how well various approaches serve retirees.

The research, which is contained in Morningstar’s “The State of Retirement Income: 2022,” determined that a starting withdrawal rate of 3.8% is safe for a balanced portfolio using an approach of fixed real withdrawals – up from 3.3% in 2021’s report. The rate is based on a 90% likelihood of not running out of funds and a 30-year time horizon.

According to Morningstar, higher bond- and equity-return expectations than last year helped to create upward pressure on starting safe withdrawal rates while inflation countered with downward pressure. Morningstar’s model used a 2.21% average annualized inflation assumption over a 30-year period in its 2021 research, but that figure climbed to 2.84% for the 2022 report.


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