Glenn Ruffenach
speaker
110 appearances
2 recordings
1 series
first heard Oct 2019
last heard Oct 2021
Glenn Ruffenach’s voice in public audio — every appearance, attributed to the second.
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Appearances
I think it's important to look at how your nest egg is performing from year to year.
And if we're going through some tough years, I think it's important to adjust your withdrawals to account for that.
Now, that's right.
It all comes down to how you pull this money out of your savings.
And there's many ways to do that.
One approach is to divide this into two goals, if you will.
You can, first of all, establish a secure base of lifetime income, you know, Social Security, pensions, annuities, reverse mortgages.
And then if you have that secure base of lifetime income, that's going to cover your essentials, shelter, food, health insurance.
And then you can say, okay, I need a way of pulling money out of my nest egg.
And if you have that secure base of lifetime income, it makes that second part, pulling money out of your nest egg, a little bit easier to cover things like travel, to cover the, I guess, the more fun parts of retirement.
It's a method established by a financial advisor named William Bengen back in the 1990s.
And it says very simply, the first year of retirement, you withdraw 4% of your retirement savings, 4%.
And then the second year, you take that amount plus a little bit more to account for whatever inflation might be.
But the point is, you're starting off with a particular number, that 4%, and then you're adding to that each year to account for inflation.
The 4% rule is popular among investors because prior to the research, there were really no good figures out there about how much people could safely withdraw from their nest egg.
Could you take out 10%?
Could you take out 2%?
How much could you take out and know that your nest egg would last 20 or 30 years?
And so Banken, Bill Banken, does some really nice research, and he establishes that you can pull about 4% from your savings every year in retirement, and you will not outlive your money.
That's a very simple way to put it.
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