Health
Tap the Nest Egg Carefully
You've seen the bumper stickers: "We're spending the kids' inheritance" and plan to "live well and die broke." But how much of the nest egg can you spend each year so you don't run out of money before you run out of life?
Quicken.com's guide to How Much Can You Withdraw? says it depends on many factors -- annual inflation, portfolio gains, lifestyle, life expectancy and plain old luck. But it quotes several studies indicating you should be safe withdrawing about 4 percent of your retirement fund in the first year.
If you have $400,000 put aside, that 4 percent would amount to $16,000 for the year -- which you would adjust for inflation each year. That doesn't sound like much, but it is a safe measure to ensure that you have money to live 25 or 30 years in retirement.
Experts at Quicken say if the market is doing well and your portfolio value is increasing at higher than the historical average rates, you would be safe withdrawing more to spend. But be prepared to cut back on your spending if the "earnings" in the retirement fund take a hit along with the rest of the market.
Quicken.com's guide to How Much Can You Withdraw? says it depends on many factors -- annual inflation, portfolio gains, lifestyle, life expectancy and plain old luck. But it quotes several studies indicating you should be safe withdrawing about 4 percent of your retirement fund in the first year.
If you have $400,000 put aside, that 4 percent would amount to $16,000 for the year -- which you would adjust for inflation each year. That doesn't sound like much, but it is a safe measure to ensure that you have money to live 25 or 30 years in retirement.
Experts at Quicken say if the market is doing well and your portfolio value is increasing at higher than the historical average rates, you would be safe withdrawing more to spend. But be prepared to cut back on your spending if the "earnings" in the retirement fund take a hit along with the rest of the market.
