"To this point, alongside this stronger market performance in 2025, you also had some negative news as higher living costs, including healthcare, combined with longer lifespans, have led many retirees to rethink how they are generating income from their savings, and these concerns aren't going away next year. The result is a mindset shift toward a 5% income strategy that continues to gain real traction."
"A 5% withdrawal rate unsurprisingly translates into more spending power. Consider that with a $1 million portfolio, the 5% withdrawal rate is equivalent to $50,000, compared with $40,000 under the traditional 4% rule. Given the rising cost of healthcare and overall living costs, this $10,000 difference, even after taxes, might be the difference between paying all bills on time and not."
After a volatile early 2025, markets rallied strongly from May, rewarding long-term investors with sizable returns. Rising living costs and longer lifespans have pressured retirees to rethink income generation from savings. Many are adopting a 5% initial withdrawal rate to boost immediate spending power while seeking to preserve long-term stability and risk profiles. A $1 million portfolio at 5% yields $50,000 versus $40,000 under a 4% rule, making the difference meaningful for healthcare and everyday bills. The growth of dividend ETFs, bond ladders, monthly-pay REITs, and cash-flow assets enables income-focused portfolios that rely less on selling shares and more on adapting to market conditions.
Read at 24/7 Wall St.
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