Money in Retirement
“The strategy is for middle-income people with $100,000 to $1 million saved to create an income stream. Traditionally, financial planners have recommend the "4 percent rule" — withdrawing 4 percent of retirement savings in the first year and increasing the amount each year by the rate of inflation. Recently some researchers have questioned that approach, saying it may not be safe enough for retirees who could be facing a lower-return environment than previous generations. Social Security is a kind of annuity that can be a solid foundation for most people's retirements. If people can delay claiming benefits until they are 70, they'll get the largest possible check. (For married couples, only the higher earner needs to wait until 70. The other spouse can begin Social Security checks at full retirement age. Once maximized, Social Security benefits likely will make up 75 percent or more of the typical retiree's income. With the bulk of their income guaranteed, retirees can keep their savings invested in stocks to reap inflation-beating growth. Withdrawals can start at age 65, using an initial 3.5 percent withdrawal rate. The withdrawal rate at 70 is 3.65 percent and it increases slightly every year after that; by age 90, for example, it's 8.7 percent.”
