What is a good safe withdrawal rate?

Determining a SAFE withdrawal rate during retirement is a crucial aspect of financial planning. One popular approach is the 4 percent rule, a time-honored guideline among financial advisors.

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The 4 percent rule advocates for withdrawing 4 percent of your portfolio's value in the initial year of retirement. This percentage serves as a starting point for subsequent withdrawals, ensuring a sustainable income stream throughout your golden years.

The calculation is straightforward: simply multiply your portfolio's balance at retirement by 0.04. The resulting amount represents the maximum you can withdraw in the first year without jeopardizing your portfolio's long-term health.

It's important to note that the 4 percent rule is not a one-size-fits-all solution. Factors such as market conditions, individual risk tolerance, and life expectancy can influence the appropriate withdrawal rate.