Dear Kim,
My husband and I have saved well for retirement, but now that we’re getting close, I’m terrified of actually spending the money. How do I know how much I can safely withdraw each year without running out?
Sincerely,
Scared to Spend
Dear Scared,
I see this fear all the time; you have saved all these years and what if it isn’t enough?
The best advice I can give you is to sit down with a planner and work through it. They can show you how much is a “safe” amount to withdraw each year without eating all the way through the principle. We used to use a safe withdrawal rate of 4% per year, but planning software has gotten much better, and it is usually a higher number.
Your planner will revisit it each year to make sure the numbers are still on track for you, and will make adjustments to the amount as market conditions change. Once you see the actual numbers on paper, your fears should abate.
Good luck!
Kim
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