Ross Coombes, Financial Planning Director – Investec Wealth & Investment – ross.coombes@investecwin.co.uk
Understanding withdrawal rates and how to make your savings last a lifetime
You’ve spent your whole life saving for retirement and now it’s time to enjoy the proceeds of your hard work. But it’s difficult to enjoy your wealth to the fullest if you are concerned that it may run out. Spending freely and being overcautious both have their drawbacks, so what is the right amount to withdraw each year? Let’s look at the numbers.
How long will your retirement savings last?
How long your retirement savings last depends on various factors, but the two with most influence are:
• The rate at which you withdraw your savings
• The rate at which your savings grow
Disregarding other factors, it’s clear that if your withdrawal rate matches your growth rate, the amount remaining would stay the same. Your pension savings could potentially last indefinitely.
However, this is easier ...
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