4% Rule May Not Be Enough: Cautionary Retirement Withdrawal Advice for Early Sixties Couples

According to recent financial analysis, a couple in their early sixties with $1.4 million in investments should be cautious about withdrawing $90,000 annually in retirement. While this amount may seem reasonable, it exceeds the widely recommended safe withdrawal rate of 4%, putting the couple at significant risk of running out of money over time. Sequence of returns risk, which is common during the early stages of retirement, further increases this danger. This occurs when unfavorable market conditions coincide with withdrawals, forcing individuals to sell more shares to maintain income levels, rapidly depleting their principal, and significantly reducing the time their savings will last. To achieve a secure retirement, it’s essential to customize a withdrawal strategy based on various factors such as retirement living expenses, investment portfolios, Social Security benefits, and healthcare costs while avoiding overspending due to lifestyle inflation. It’s best to consult a financial advisor for personalized advice and guidance on an appropriate withdrawal strategy that balances income with longevity.