One of the biggest fears for retirees and near-retirees is that your money won’t last in retirement. Making your money last in retirement for possibly 30 years or more, not knowing what lies ahead is daunting. So this week, I’m sharing with you some ideas from my financial planning background and my experience helping many clients make the transition into retirement with confidence, in order to help you better understand your chances of running out of money in retirement. 

Yesterday, I shared with you how to figure out how much income you’ll need in retirement. 

Today, let’s talk about where that income will come from and how to make sure you don’t run out of money in retirement by draining too much from your portfolio. 

Now that you know what you’re spending on a monthly basis, let’s calculate your income sources. Start with social security and any pensions. Add those up, then determine any other income sources like rental property or alimony, etc. Once you add up all your other income sources, calculate your shortfall by looking at what you’ll be spending each month. 

Whatever income needs aren’t covered by these sources is the amount you’ll need to take out of your investments each month. Calculate what % of your current portfolio that represents on an annual basis. 

So let’s say you have $1,000,000 and you need to take out about $3,000 out each month from your portfolio to fill your income gap. That’s $36,000 a year, which represents a withdrawal rate of 3.6% on your $1,000,000. 

For the most part, an annual withdrawal rate at or below 4% is ideal, but each situation is different depending on how old you are when you retire, how your portfolio is invested, etc. 

That’s it for today. Thanks for listening! Tomorrow, I’m going to share with you the tax surprise in retirement that you don’t want to overlook. 

Before you continue on with your day, please take a moment to leave a review for the One Minute Retirement Tip in Amazon. If you’re getting any value from these tips, it’s a great way to share the love. 

My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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