Edward Jones Discovers Investors Have Varying Opinions on Retirement Drawdown RatesPosted by in Blog on October 17, 2011
While some financial advisors say that retirees should take out 4% of their retirement savings each year, how many people actually heed that advice? That’s what a recent survey by Edward Jones set out to discover.
OnWallStreet.com reports reportsthat the investment firm asked 1,011 people how much they thought they needed each year during retirement. They found that 34% “have no idea how much they will need to withdraw each year,” the article says, while 25% thought they would spend more than 10% of their retirement funds each year, a drawdown rate significantly larger than that recommended 4% per year. Edward Jones also discovered that of those already retired, 15% are planning to spend more than 10% of the retirement funds each year.
“While it is difficult to estimate exactly how much Americans will spend during their retirement years,” Scott Thoma of Edward Jones says, “there are a number of factors to consider when building a retirement plan, such as healthcare risks, changes in Social Security and the type of lifestyle they want to lead.” Thoma says that “It is important they work with their financial adviser to make sure their savings strategies are in line with their retirement goals, as well as incorporating reasonable expectations for acceptable withdrawal rates, which we believe should start in the neighborhood of 4%.”
Written by Lisa Swan