Course 310: How to Withdraw from Your Portfolio in Retirement
Making Refinements
In this course
1 Introduction
2 Find Your Asset Mix, Time Horizon
3 Determine How Confident You Want to Be
4 Find Your Withdrawal Rate
5 Estimating How Much of Your Portfolio You Can Spend
6 Other Sources of Income--and Taxes
7 Making Refinements

If you aren't satisfied with this final dollar amount, see if you can change your withdrawal rate by altering your asset mix, your confidence level, or your number of years in retirement.

If you are satisfied with what you've found, congratulations! But, unfortunately, the work doesn't end here. Your spending rates will probably change over time. Later in life, for example, you may be less active, and may therefore spend less on travel and entertainment.But you may need to spend more for medical attention. The key is to plan for flexibility.

Further, if these worst-case scenarios don't materialize, you may leave a larger estate behind than you intended to.

For example, if you choose to be 95% sure that you'll have enough money to last 20 years with an asset mix of 50% stocks, 35% bonds, 15% cash, and an initial portfolio balance of $1,000,000, there would be about a 50% chance that your final estate will top $800,000.

That's just one reason why you'll want to monitor and adjust your spending amounts throughout your retirement.

Next: The Quiz >>

Print Lesson |Feedback | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2015 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.