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Retirement is supposed to be a well-deserved break after the pressures of the working world, but that doesn’t mean it’s easy. One of the toughest parts can be figuring out how much you can safely spend during retirement. If you take out too much, you run the risk of running out of assets later in life, especially if you’re fortunate enough to enjoy a long life span. If you take out too little, you might miss out on some of the fruits of a lifetime of savings, such as travel, dining out, gifting money to charity or family members, or spending more on leisure activities. Pinning down a number that’s neither too high nor too low is notoriously difficult, and the stakes are high.
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When it comes to in-retirement retirement income and specifically the amount you can safely withdraw from your portfolio without running out I’ve got good news and bad news.
Chances are you’ve already heard the bad news, but I’ll repeat it just in case. Thanks largely to low starting bond yields, which in turn depress a portfolio’s return potential, new retirees should start with a lower withdrawal percentage than the standard guidance of 4%. Doing so will cut the odds that they’ll prematurely deplete their funds over a 25- to 30-year retirement time horizon and help blunt the impact of a bad equity market occurring early in retirement.
15 personal-finance lessons we can all learn from the year of Covid-19
An accessible emergency fund can help alleviate the need for drastic cuts in spending when facing temporary shocks to your income
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Jonathan I. Shenkman
, The Wall Street Journal
Among them: You really do have to plan for emergencies, and your personal-finance decisions don’t exist in a vacuum
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With 2020 in the rearview mirror, and the end of the pandemic (fingers crossed) in sight, there’s a lot of economic damage to be assessed. But there are also a lot of personal-finance lessons we can learn lessons that will put us in good stead, whatever the economic future holds.
Jeff Ptak: And I m Jeff Ptak, global director of manager research for Morningstar Research Services. Benz: On this week’s episode we’ll feature some of our favorite clips from interviews we’ve done with financial planners, advisors, and retirement researchers over the past year.
In next week s episode, we ll include some of our favorite excerpts from our interviews with portfolio managers. The pandemic was dominant in 2020, and we asked almost all of our guests to share their perspective on how it has affected how they approach their work and the guidance they provide to others.
Top of mind for Washington Post columnist Michelle Singletary was the importance of people at all income levels holding liquid reserves to tide them through economic shocks.