Forget the 4% Rule: This Income Strategy Lets Retirees Safely Withdraw 5.5%

"Most people retire in their 60s, which gives their retirement portfolios more time to potentially run out of funds. That's why the 4% withdrawal rule is a common approach. However, you won't have as many retirement years if you leave the workforce at 70, which will give your money more time to stretch. Social Security will also act as a good financial buffer that can support your living expenses."

"If your portfolio generates annualized returns above 5.5%, then you can withdraw 5.5% each year without worrying about running out of money. Some people put most of their money in index funds, hoping to outperform an elevated withdrawal rate each year. It's still good to have some cash sitting around so you can cover 1-2 years of living expenses without withdrawing from your portfolio."

Delaying retirement and building an effective portfolio can enable a 5.5% annual withdrawal for some retirees. Waiting until age 70 reduces the number of retirement years and allows Social Security to act as a financial buffer, making higher withdrawals more sustainable. Achieving annualized portfolio returns above 5.5% supports a 5.5% withdrawal without depleting capital. Maintaining 1-2 years of cash reserves prevents forced sales during market corrections. Increasing withdrawals in strong market years and avoiding asset sales at losses can preserve long-term portfolio health. The strategy requires careful timing, disciplined portfolio construction, and is not suitable for everyone.

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