How to Make Your Nest Egg Last in a Low-Return Environment
The 4% safe withdrawal rate might not be so safe anymore. After a huge run-up in the valuations of both stocks and bonds since the coronavirus crash of March 2020, expected returns for both asset classes are much lower than they used to be. When retirees can't count on their portfolios returning as much on their investments without additional risk, they need to accept a lower withdrawal percentage every year.
Morningstar suggests the safe withdrawal rate for a 30-year retirement is just 3.3% for a portfolio made up of 50% stocks and 50% bonds based on its expected returns and volatility of the asset classes. Here's why that's considered safe, what investors can do to increase their withdrawal rate, and what investors should avoid.
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Source Fool.com
