If you have approached the age for retirement, you must have this thought in your mind about how much money do you have, how long will this money last and how much money can you withdraw every year?
When you are about to retire, you need to spend a balanced lifestyle which will happen only of you thoughtfully spend your current money and preserve some money for the upcoming years upcoming years. This is only possible if you think very smartly and do proper planning.
Researchers reveal that most of the retirees do not follow this procedure at all. Instead these retirees only think about how much money should they withdraw each and every year. Since they do this, when the age of retirement approaches, there account does not have that much money which should have been there.
This also results in the increase in assets which is then passed down to the other members of their families. This is a good thing but then the retirees do not have anything saved up for their own selves.
In the following article, we will be following a rule of thumb which is more properly known as the 4 percent rule. Read on below to find out more about the 4 percent rule. The 4 percent rule states that you can take out 4 percent from your portfolio value every year in the retirement without the possible worry of you running out of money.
If you make use of this 4 percent rule, with every 10000 dollars that you have, you will withdraw 4000 dollars each year. It can be quite hard as well to ignore the amount of 4000 dollars and put it aside and to not use it for your own expenses specially when you are young. However, if retirees use this amount on their retirement age, they can do lots with this amount and it will substantially add up to a great amount.
How to follow the 4 percent rule
The 4 percent rule is also quite conservative and this is also because it does not take in to account your other income sources nor its timings. An example is that when you turn the age of 60, you might wish to retire or there are many who would retire at the age of 60. People who retire at the age of 60 cannot avail the social security pension.
This is an advantage to the retirees since they can now withdraw an amount more than the 4 percent that they were already withdrawing. However, retirees are often scared at changing the percentage and feel they will soon run out of money if they do not follow the exact rule. However, if you think properly and wisely customized withdrawals increase your savings and they will also last a longer time.
Take help from a financial advisor
If you are not comfortable with the idea of withdrawing the amount yourself you can always hire a professional to do this. Retirement professionals know very well how to do their jobs and you can always seek help from them in order to follow your withdrawal plans.
Apart from this, you have to be very careful of your financial advisor who will use the 4 percent rule in order to find out your withdrawal amounts. So, it is much better if you do not cheat yourself with the 4 percent rule and end up spending all the extra 4 percent money which is only for your retirement.
Retirement is one of the biggest financial decisions that you will ever make and to do it you need to evacuate this plan very properly and smartly as well. It is always better if you take help from a financial advisor who will deal with the entire process.
The bottom line
You must have gotten the complete hang of the 4 percent rule with this article right. The next thing that you now have to do is to properly evacuate this planning of 4 percent withdrawal from your account.
Hire a professional advisor who will help you figure out the exact amount that needs to be taken out when you finally approach the age of your retirement.
