Pre-Retirees Overly-Optimistic About How Much They Can Withdraw in Retirement

When Fidelity Investments recently asked just over 1,000 pre-retirees what percentage of savings financial experts suggest they should withdraw annually in retirement, 19 percent said the recommended figure was seven percent to nine percent a year. That’s an amount most retirement experts would agree puts them at high risk of outliving their nest egg, according to retirement planning columnist Walter Updegrave in his recent article, Some People Have a Crazy Idea of What They Can Afford in Retirement.

Fidelity suggests limiting yourself to an initial withdrawal of no more than four percent to five percent of savings, and then adjusting the dollar amount each year to maintain purchasing power in the face of inflation. Even more disconcerting, wrote Updegrave, is that another 19 percent of those queried as part of the company’s Retirement IQ survey felt they could withdraw even more, ten percent to 15 percent a year, a rate that Fidelity estimates could possibly deplete their savings in less than ten years.

In short, nearly four in ten of the soon-to-be retirees surveyed had an unrealistic view of how much they could spend from savings each year without jeopardizing their retirement security.