Mistakes in retirement can be costly and unfortunately very common. Money magazine’s recent article captures 15 examples.
While I have seen every one of these 15 mistakes actually happen, the most common issue I’ve seen this year is Number 7 on the list: Not knowing how much to withdraw.
This has become more pronounced as a result of the flat market. Investors who saw an 8-10% rate of return on their account could take out about 8-10% each year and end up with an account balance close to what it was at the start of the year. But with the markets flat to down slightly, investors who continue to take out 8-10% each year are seeing their account down by that amount.
The general rule of thumb is to take 4% per year. Take out more on a regular basis and you run the risk of depleting the account.