Part 4/8:
The experts propose that if a retirement fund provided an average return of 11%, a conservative withdrawal rate of approximately 8% could support an annual income of around $90,000, assuming no debt is carried into retirement. The importance of being debt-free cannot be overstated; without liabilities, the monthly living expenses decrease significantly, allowing retirees to stretch their savings further.
The Risks of Early Withdrawals
However, if withdrawals are excessively aggressive—say, around $100,000 per year—the longevity of the retirement fund could be compromised. It’s important to balance the withdrawal rate to prevent the risk of outliving the money, often a concern for retirees.