March 4, 2012 in Business

Dave Carpenter

Avoiding the nightmare financial scenario in retirement running out of money is gettingtrickier.

Rising life expectancy means having to pay for a longer retirement. The lack of a pension or frozen benefits translate to fewer, smaller checks from ex-employers. And the days of being able to count on averaging 10 percent annual returns from the stock market areover.

All that makes it even more important for retirees to know just how much they can take out of their portfolios every year without drawing them down toofast.

There isnt one model that fits all. It depends on individual circumstances, best reviewed with a financialadviser.

But the classic guideline long followed by many, and still respected, is widely known as the 4 percent rule. It holds that if you withdraw no more than 4 percent from your savings the first year of retirement and adjust the amount upward for inflation every year, you can be confident you wont run out of money during a 30-yearretirement.

The strategy is credited to financial planner William Bengen, who published his research in the Journal of Financial Planning in1994.

The twist is this: The father of the 4 percent rule says the complete number is actually 4.5percent.

Read this article:
4 percent retirement withdrawal rule still holds true - Sun, 04 Mar 2012 PST