How much can I safely withdraw from my retirement savings without running out of money? Is there a formula?
Posted by admin in Finance Wednesday, 12 January 2011 08:34 3 Comments
I am planning on an early retirement and need to know what portion of my nest egg I can use to supplement my other sources of income without fear that I will end up with zero. I have another 40-50 years of life expectancy and plan to continue to invest the remaining balance as I make once-a-year withdrawals.
There are a lot of retirement withdrawal calculators out there. Here’s a link to one of them. Hope this helps.
I would check out the online calculators as well. The number my broker says is 8% of the gross. That’s assuming you are earning 15% on your money and inflation of 5%. The goal should be to not touch your principal. If you run the numbers and start hitting your principal, you will be in trouble, unless you have a TON of assets in your retirement plan. 40-50 years is a long time, you would need millions, I would think. Perhaps you can supplement your income with a small part time job instead of tapping your retirement. You also don’t say how old you are, you’ll pay penalties depending on the plan if you try and withdraw prior to 59 1/2.
Here are some calculators I found
http://www.americantrust.com/Retirement_Planning/Planning_Tools/Withdrawal_Estimator.html
http://www.money-zine.com/Calculators/Retirement-Calculators/Retirement-Withdrawal-Calculator/
http://www.kiplinger.com/tools/
Kiplingers is my favorite site for $$ issues
Good luck, and happy retirement
You can go to a fee-only financial planner who can run the Monte carlo analysis of your savings to see if you won’t run out of money at retirement.