How much of your investment portfolio can you withdraw each year in retirement?

Thirty-two years ago, the Kaderlis sold everything they owned, including their home and restaurant. They put all of their proceeds ($500,000 USD) into an S&P 500 index fund and decided to retire in Mexico.

For years, their portfolio was their only source of income.

What would have happened if they had consistently withdrawn an inflation-adjusted 4 percent annually from their initial $500,000 portfolio?

And should the 4 percent rule be more of a guideline than a rule? If so, how do we deal with that? Should it be 3% or 1.8%? The best answer is, "None of the above."

In this article, I answer the above question, and then I extend it.

Click to read the rest of my article at AES International

How much can retirees withdraw from their investments each year?

People assume they can see the future. Nobody can, of course. Regardless of what happens, flexibility is key. Use the 4 percent rule as a base, and operate from there.

AES InternationalAndrew Hallam