2 Vital Questions for Spending a Retirement Portfolio

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Diversified Portfolios Can Handle Higher Withdrawal Rates

The initial retirement withdrawal rate could well exceed 4%, based on statistical evidence that shows a highly diversified portfolio can sustain withdrawals of 5% and even more over a 25-year period.

The Retirement Portfolio Lifecycle

A retirement portfolio has a 70-year life: 35 years of saving followed by 35 years of spending. While financial engineering can stretch the nest egg over time, a good rule of thumb is to have 12 times final income saved upon retirement. We compare 10 retirement portfolios at various savings rates to determine which investment models offer the greatest chance for success.

Spending Order: Improving Choices Today for a Better Life Tomorrow

How clients withdraw cash plays a major role in determining their tax bill in retirement. Do you start with RMDs and move on to taxable accounts or something else? Recent Vanguard research shows that efficient spending from a portfolio today can directly impact how much a retiree has to spend tomorrow.

The Retirement Spending ‘Smile’: Estimating Changes in Retirement Expenditures

Conventional wisdom may be overestimating how much clients need in retirement. Recent research shows that the growth rate in retiree spending looks like a “smile”—expenses grow most rapidly at the beginning and end of retirement, with an offsetting dip in the middle. Bottom line, clients may need 20% less in savings than originally thought.