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A new report from Morningstar recommends the safe withdrawal rate for retirees in 2025 is a mere 3.7% — a significant adjustment from the decades-old 4% rule that had dominated retirement planning.
An interesting analysis completed by analysts at Morningstar actually suggested that the forward "safe" withdrawal rate may actually be ... Living to 100 is much more common today than it was a ...
The 4% rule may be too risky if you’re retiring on the early side. A 3% or 3.5% rate may be more suitable, depending on your investment mix. It’s best to consult a financial advisor to come up ...
Morningstar’s research on the optimum initial safe withdrawal rate started in 2021 when the analysis recommended a 3.3% withdrawal rate. For 2022, that rate increased to 3.8%.
Here's how it all works: Start with a $1 million initial investment, a 4% stated withdrawal rate, and a 2.42% inflation rate, you would withdraw $40,000 from the portfolio in Year 1, $40,968 in ...
In that scenario, a 4% withdrawal rate allowed the investor's funds to last 30 years. Historically, Bengen says closer to 7% is an average safe withdrawal rate and at other times withdrawal rates up to 13% have been feasible. [15] A 4% withdrawal rate is also one conclusion of the Trinity study (1998).
Other authors have made similar studies using backtested and simulated market data, and other withdrawal systems and strategies. The Trinity study and others of its kind have been sharply criticized, e.g., by Scott et al. (2008), [2] not on their data or conclusions, but on what they see as an irrational and economically inefficient withdrawal strategy: "This rule and its variants finance a ...
“Simply not adjusting withdrawals upward for inflation after a losing year — such as keeping 2023 withdrawals the same as 2022 — allows retirees to start out with 4% withdrawals versus 3.8% ...