Rethinking the 4% retirement spending rule

Submitted on Tue, 03/04/2014 - 12:00 am

How much can you afford to spend in retirement? The answer is getting a little more complicated.

For guidance, many retirees rely on the so-called 4% rule, which says you can withdraw 4% from your savings in the first year of retirement, and then give yourself an annual raise to account for inflation each year, without running a big risk of running out of money. Now, J.P. Morgan is entering the fray with an alternative to the 4% rule of its own. The good news: You’re likely to be able to withdraw more than 4% of your account’s balance each year. The bad news: The method is fairly complicated to implement, so you will need the help of a financial adviser (which is good news for J.P. Morgan, which employs a network of them.)