{"id":1510,"date":"2012-07-25T16:17:08","date_gmt":"2012-07-25T23:17:08","guid":{"rendered":"http:\/\/www.marketriders.com\/blog\/?p=1510"},"modified":"2016-12-21T07:30:58","modified_gmt":"2016-12-21T15:30:58","slug":"safe-retirement-withdrawal-rate-guess","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/safe-retirement-withdrawal-rate-guess\/","title":{"rendered":"Safe Retirement Withdrawal Rate? Guess…"},"content":{"rendered":"

What\u2019s a safe retirement withdrawal rate? If you\u2019re like most Americans, you probably think that you need $1 million to achieve it. And there\u2019s a reason you think that. Financial advisers<\/a> for years have relied on what\u2019s known as the \u201c4% rule\u201d to help clients figure out how to avoid outliving their assets.<\/p>\n

Under that rule, $1 million gives you a somewhat acceptable starting point of $40,000 a year.<\/p>\n

\"Americans<\/a><\/p>\n

What, you say, $40,000 isn\u2019t enough? Of course it isn\u2019t. As economics professor Teresa Ghilarducci at the New School for Social Research in New York points out,\u00a0it\u2019s laughably short of reality. She writes in a recent column in\u00a0The New York Times<\/em><\/a>:<\/p>\n

To maintain living standards into old age we need roughly 20 times our annual income in financial wealth. If you earn $100,000 at retirement, you need about $2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less. This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security.<\/p><\/blockquote>\n

The really stunning part, as she notes, is how many Americans have virtually empty bank accounts. New data from the Employment Benefit Research Institute show that two-thirds of workers say that they have saved money for retirement<\/a>. But nearly the same percentage admit that they have less than $25,000 to show for their efforts. There is no safe retirement withdrawal rate for them because there is no money to withdraw.<\/p>\n

As Ghilarducci starkly warns, such dismal savings rates<\/a>\u00a0will have a real impact on people\u2019s lives as they age. She suggests that nearly half of middle-class workers will simply subsist, living Third World calculations of dollars per day, never mind the typical \u201cgolden years\u201d notions of travel and leisurely golf outings.<\/p>\n

Finding a safe retirement withdrawal rate<\/h2>\n

You likely have noticed the shift. Take a close look at the folks handling your bags at the airport, checking your groceries, or pouring you a coffee during the day. Increasingly, you see the service jobs once populated by college kids and teens instead being held by retirees.<\/p>\n

Some have a pension. Many probably took federal benefits early. Yet it\u2019s still not enough. They need something, anything, to close the gap. A\u00a0Boston College report<\/a> suggests that people who feel unprepared should target working to age 70. What\u2019s less clear is the availability of jobs for masses of graying part-timers.<\/p>\n

The implications for savers still in their productive years are staggering. First, anyone taking their retirement seriously is right to wonder if government benefit programs will meet the need. Poverty is likely to quickly become a real issue for older Americans right here at home, not an abstract concern about other people overseas.<\/p>\n

Importantly, Americans who have the advantage of time, even if it\u2019s 10 years, should ensure that their own retirements are not abandoned to the vagaries of poor planning, chance, or unforeseen market meltdowns.<\/p>\n

It\u2019s time to buckle down and find your safe retirement withdrawal rate, then make a plan to get there, on time, securely and with the minimum of risk<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

What\u2019s a safe retirement withdrawal rate? If you\u2019re like most Americans, you probably think that you need $1 million to achieve it. And there\u2019s a reason you think that. Financial … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":1523,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[8],"tags":[37],"yoast_head":"\nSafe Retirement Withdrawal Rate? Guess... | MarketRiders.com<\/title>\n<meta name=\"description\" content=\"What\u2019s your safe retirement withdrawal rate? If you\u2019re like most Americans, you probably think $1 million. 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