Ready to tap the nest egg? Deciding how much income to draw down in retirement is tricky. Spend too much and you face the prospect of running out. Spend too little and you may regret paths not taken.
Even if you pick the ideal number for your portfolio, or have an income defined by a pension or annuity, do you know whether you could live on it? Many financial planners invariably say clients vastly underestimate their actual spending when they are looking down the road to retirement, likely because they haven’t done a very good job tracking spending in earlier years.
“Nine out of 10 people get their spending assumptions completely wrong,” said Ty Bernicke, a financial planner who has written articles on retirement spending and has a large retiree clientele. “I just look at their gross income, and back out taxes and [retirement contributions], and come up with a figure.”
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That’s a scary prospect for people with lump sums who hold the power to give themselves a raise.
After studying the sample below, send your own retirement spending figures, your age, city and state to this column. If we receive enough responses to get an interesting cross section of retirees, we’ll publish the aggregate data.
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