Retirement means relaxing, traveling or taking up new activities.
No more stressful commutes or long meetings.
Retirement can feel like a dream.
But that money has to last for the remainder of your life.
The question then becomes how much to take out.
However, its essential to recognize that there is no one size fits all approach to retirement withdrawals.
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What Is the 4% Rule for Retirement?
The concept ofthe 4% rulefor retirement started in 1994.
Thats when a former financial advisor named William Bergen tried to answer a question he regularly got from clients.
How do you use your retirement savings while also ensuring you have enough to last?
He decided to crunch the numbers himself.
The results were published in theJournal of Financial Planning, revealing his take on what he learned.
That ups the amount you withdraw each year.
But whether its 4% or 6%, DeLuca has thoughts about retirement spending rules.
It is too rigid of a concept for any one person to follow.
The economy has shifted considerably since Bergens number crunching in the 90s.
But how much should you spend each year in retirement?
Lets debunk a few retirement spending myths to help you create your budget.
Its better to die with money in the bank than run out of money a few years in.
In fact, Vanguard CFP Ryan Wibbens said some retirees are too frugal in retirement.
They arent making the most of the money they worked so hard to earn over the years.
A withdrawal strategy should accomplish two often-competing goals, Wibbens advises.
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Chris Urban, CFP, RICP and founder atDiscovery Wealth Planningsaid retirees vary in their day-to-day activities.
Some have more expensive medical bills or spend their golden years traveling.
These factors can shift the amount of money you should take out each year.
In my opinion, it is much better to have a dynamic spending approach for retirement, he said.
A skilled financial advisor can help with that.
Or, set a budget you might revisit and tweak as you learn more about your post-retirement lifestyle.
Stephanie Faris is a professional finance writer with more than a decade of experience.
