How Retirees Can Withdraw More Than 4% Per Year

You probably know about the “4% rule.”

Studies show that retirees should be able to withdraw an inflation-adjusted 4% per year (based on their account value during their first retirement year).

But recently, I’ve warmed to something else. With this new method, a retiree’s money would have lasted more than 40 years…. even if they began on the eve of history’s biggest market crash (1928).

You might think I’m talking about withdrawing just 3% per year. But no… this goes the other way.

With a couple of simple rules (that make a lot of sense) retirees should be able to withdraw an inflation-adjusted 5% per year.

That’s a 20% income boost, compared to the 4% rule.

Image by Pixabay


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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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2 Responses

  1. Sara Abu E says:

    Dear Andrew,
    It was a great pleasure meeting you in Dubai. One follow up suppose you are buying VWRD with all you life savings via InteractiveBrokers. What happens if IBKR or Vanguard goes bankrupt?

    • Jack says:

      Interesting question…. perhaps Andrew can shed some light. I guess vanguard going out of business would be very unrealistic but would result in ETF be delisted and funds deposited as the underlying assets are not affected by any of this.
      I’m not sure about the broker. I guess cash in your account would be at risk. All instruments you own shouldn’t be affected as far as I know as you own them not the broker. He just helped to buy them…

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