Imagine this. After decades of saving and investing, you’ve hit a milestone: S$1 million in your investment portfolio. Congratulations. You have done what most people only dream about. But the thing is: As soon as you stop working, the clock starts ticking. Every dollar you take out is a dollar that is no longer compounding for you. Withdraw too much, too fast, and you may outlive your money. Withdraw too little, and you’ll spend a lot of money in what should be your best years. So how much can you safely spend each year? In fact, this is a million dollar question.
For the longest time, financial advisors had a simple answer: Take your portfolio’s average historical return, subtract inflation, and withdraw the difference. This seems appropriate. After all, the S&P 500 has delivered an average annual return of about 10% since 1928. But here’s the problem with averages. According to Charlie Bilello of Creative Planning, only 4% of those years produced returns…
