Yahoo Finance published this video item, entitled “Safe retirement withdrawal rate rises to 4%: Morningstar study” – below is their description.
It seems as many retirees gear up for retirement, the calculations involved can be overwhelming when including rising inflation and average life expectancy. So how much money can retirees withdraw from their retirement investment accounts to meet their needs and not run out of cash? According to Morningstar, the number is 4% for 2023, up from 3.8% in 2022. Morningstar Inc. Vice President of Research John Rekenthaler joins Yahoo Finance Anchor Diane King Hall to discuss the report.
When asked about people’s worries in outliving their retirement savings Rekenthaler responds: “The important thing to understand is we have a conservative approach when we are forecasting and saying ‘Okay, people can spend 4% of their nest eggs’ for one that’s over a 30 year time horizon. So that’s pretty long, if somebody is 65 years old, even with longer life spans today, that’s taking you out to 95. Second thing is for the most part, people aren’t spending as much money when they’re 95 years old as when they’re first retired…and the third is, in most cases – because we built this to have a 90% success rate according to our simulations – in most cases there is quite a bit of money left over at the end of the… period.”
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