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Personal Finance

Morningstar's Guide to Setting Your Withdrawal Rate

Here's how to tap into your nest egg when the time comes.

Investors spend decades building their retirement kitty. During that time, they've probably learned a thing or two about how to allocate their assets, keep their investment costs low, and maximize their aftertax results. Chances are they've accumulated several different accounts (both taxable and tax-deferred) for funding their retirements, too. And if they've saved well and invested appropriately, they will likely find themselves in a position to retire--or at least scale back their work load at some point.

But with retirement comes a whole new set of questions about how to generate income from those savings (among other sources). How much of your nest egg should you tap each year in retirement? Should you claim Social Security now or wait? Which accounts should you tap first?

And the biggest question of all: How can you ensure that your assets will last the duration of your retirement?

"One of the key ways to make your portfolio last throughout retirement is to give care to how much you withdraw from your portfolio," says Morningstar's director of personal finance Christine Benz. "It's a tough question, and the right answer will only be apparent in hindsight."

This guide is designed to help those entering or in the decumulation phase determine their withdrawal rates.

What's a Safe Retirement Spending Rate for the Decades Ahead? Simple tweaks can have an appreciable impact on your withdrawal rate.

Is 3.3% the New 4.0? Recent Morningstar research shows that the 4% standard for in-retirement withdrawals may be a bit too aggressive. Does the 4% Guideline Rest on a Flawed Assumption? In-retirement spending is often incredibly variable rather than static. How to Set Your Retirement Withdrawal Rate Why calculating your spending rate isn't a one-and-done project.

Should Your Retirement Portfolio Withdrawals Vary With the Market? We delve into the trade-offs associated with flexible withdrawal systems versus those that deliver steady cash flows.

Contemplating Retirement Income? Start Here Nonportfolio strategies can deliver big payoff for retirees' plans.

The Long View Podcast: How Much Can You Safely Spend in Retirement? Christine Benz, John Rekenthaler, and Jeff Ptak discuss their recent research on safe withdrawal rates, which found retirees will need to dial back spending in the years ahead.

Whitepaper: The State of Retirement Income: Safe Withdrawal Rates

How to Create a Retirement Policy Statement Use our template to document your retirement assets, strategy, and spending system.

Get a Tax-Smart Plan for In-Retirement Withdrawals Consider these strategies to stretch out your tax savings during your retirement years.

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