Successful retirement planning is a long-term committed aspiration and many Americans are having trouble meeting their retirement goals. A late 2016 survey by Fidelity Investments showed that 53% overestimated the percentage of their initial retirement assets, i.e. the amount in savings at the time of retirement. The correct answer is no more than 4-5% a year.
Pre-retirees, those aged 55 to 65, answered correctly 42% of the time. However, 38% of that same group said that 7% or more could be withdrawn in a given year. Another 15% said that 10-12% could be withdrawn on an annual basis.
The report’s authors were concerned that many respondents would run out of retirement savings within a decade at these rates of withdrawal. They suggested covering essential expenses with guaranteed income sources like pensions, annuities or Social Securities and using the 4-5% withdrawals for travel, gifts and other “nice to have” items.
For more on this important research, check out our article tomorrow.