This is a good article to start planning and thinking about the withdrawals from your portfolio during retirement.
When building a retirement portfolio, many, if not the majority of investors, have this "set it and forget it" mentality. Just put your portfolio on auto drive! I see this as a mistake. Markets are notorious for change. What works today may not work tomorrow. In other words, you have to be flexible in your approach. Like a good boxer you have to "bob and weave". Unfortunately, most 401K participants, set their plan on "auto drive" to their own detriment. As they say, "The rock in the river that stands firm will erode over time, but the leaf will survive as it adjusts to the flow of the river".
Just as flexibility is important in building a portfolio, it is essential in the payout phase or retirement years. One of the biggest rules used is the 4% rule. In it, you take out 4% of your portfolio each year during retirement. While the 4% rule is a great "target" during your wealth building years, it should only be a target during wealth building years as something to shoot for.
The amount withdrawn in retirement is a function of many variables that change over time. Some of those variables are flexibility in spending needs, your stock/bond mix, the level of the equity markets, and the general activity in the market. It is not something that is easily handled by a "set it and forget it " formula.
To be successful you must constantly educate yourself with the factors effecting your nest egg in retirement. You may have a broker managing your funds, but ultimately YOU are responsible for your own success or failure. As Regan said "Trust, but verify". Some may say this is hard for them to do, but scrapping by in retirement is a whole lot harder. Don't let this be you!
Start educating yourself today about these issues before the withdrawal years. Like a storm, you want to be ready for the storm well before it hits. It is not easy, but it can be done - if you want the financial resources to really enjoy your retirement.
Now get those gloves on (planning and educating), step in to the ring and get your body moving. "Bob and weave, bob and weave....." And don't forget to keep your arms up at all times. You don't want to get knocked out because you let your arms down!
