ANSWER: False.
According to this popular retirement-spending strategy, you can safely take 4% of your total portfolio in the first year of retirement and the same amount, adjusted for inflation, every year afterward.
But the rule, based on an analysis of returns over a series of 30-year periods starting in 1926, doesn't reflect current and future conditions. Entering retirement in a bear market and taking 4% from your nest egg could cripple your portfolio. Rather than follow the rule blindly, consider lowering the percentage or skipping the inflation adjustment in years when the market performs poorly.
On the flip side, you might be able to increase the percentage of your withdrawal when the good times roll.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
These links are provided by Fidelity Brokerage Services LLC ("FBS") for educational and informational purposes only. FBS is responsible for the information contained in the links. FICS and FBS are separate but affiliated companies and FICS is not involved in the preparation or selection of these links, nor does it explicitly or implicitly endorse or approve information contained in the links.
