In today’s show, I’m going to be answering a question that far too many retirees don’t know the answer to and that question is, “What is the correct withdrawal rate for my retirement?
The question regarding withdrawal rates and retirement dates back decades. Since traditional retirement plans were brought about in the 1970s people have wanted to know how much money they could withdraw from the retirement and have it last until they passed away. In the mid 1990s, it was assumed that based on life expectancy and current returns in the market, a retiree could take around 7% per year and still be okay. But there was an individually started questioning this logic. He was a native in New York who was born in 1947. He got a Bachelor of Science degree in aeronautics and astronautics from MIT. He worked for 17 years with his family owned soft-drink-bottling franchise firm in the new New York metropolitan area. The company sold in 1987, which is when he decided to become a financial advisor. His name is William Bengen. William started using what is called the Monte Carlo method to help determine the probable outcome of people’s retirement plans based upon certain withdrawal rates during the mid 1990s….