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Is A 3% Withdrawal Rate Too Conservative?

Monday, May 14, 2012 - 2:18 PM
Liz Weston responds to a question from one of her readers that asks her if a 3% withdrawal rate is too conservative for someone who is retired. She sums up her advice in this article. An excerpt is below:
Some advisors contend that a 3% initial withdrawal rate, adjusted each subsequent year for inflation, is too conservative. If you retire into a long-lasting bull market, it may well be. But none of us knows what the future holds, which is why so many advisors stick with the 3%-to-4% rule.

Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634
1. Monday, May 14, 2012 - 3:05 PM
3%, 4%, or 2%... The only useful sentence is "...none of us knows what the future holds..."  The stock market may be bull or bear; one's life may be long or short; the salary may be high or low; the job may be here or gone; one's life style may be frugal or luxurious;...  So guessing this number of withdrawal rate is wasteful, useless, and case-by-case dependent. 

Just save as much as one practically can for retirement and live a happy, contented, and useful life presently. 
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
2. Monday, May 14, 2012 - 4:23 PM
Re: 51hh @ 1. Monday, May 14, 2012 - 3:05 PM

I concur 100% with your post. What gets me is that some of these financial columnists like Liz Weston actually get paid to offer sage advice such as "none of us knows what the future holds".  Brilliant.
ShorebreakShorebreak2,678 posts since
Apr 6, 2010
Rep Points: 14,534