Withdrawals from a Retirement Portfolio: Three Primary Options

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Withdrawals from a Retirement Portfolio: Three Primary Options

Craig Israelsen, Ph.D.

We observe that since 1926 a retirement portfolio being drawn down by the current RMD percentages for a period of 25 years finished “above water” (with more than the starting amount) almost 100% of the time (assuming a 60% equity/40% fixed income portfolio). For those who have retirement accounts that are not governed by the RMD, the option to withdraw a set percentage or a COLA-based annual withdrawal is a decision they will need to make. The findings in this analysis would favor a set percentage withdrawal (such as 4% or 5%) because it increases the annual withdrawals (due to growth in the portfolio) without endangering the portfolio account value.

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