Making Portfolio Withdrawals
When planning for retirement income, you'll need to determine your portfolio withdrawal rate, decide which retirement accounts to tap first, and consider the impact of required minimum distributions.
Your retirement lifestyle will depend not only on your asset allocation and investment choices, but also on how quickly you draw down your retirement portfolio. The annual percentage that you take out of your portfolio, whether from returns or the principal itself, is known as your withdrawal rate.
Take out too much too soon, and you might run out of money in your later years. Take out too little, and you might not enjoy your retirement years as much as you could. Your withdrawal rate is especially important in the early years of your retirement; how your portfolio is structured then and how much you take out can have a significant impact on how long your savings will last.