Creating an adequate amount of income for individuals to live comfortably in retirement will require a combination of several income producing strategies, as well as knowing what constitutes realistic and “safe” withdrawal rates from retirement plans, according to a new issue brief by the Institutional Retirement Income Council. For individuals not to outlive their retirement funds, they need to treat their retirement plan account balances as a source of monthly income rather than as personal wealth, according to the report.
“Many retirees believe they can withdraw 10% or more of their retirement savings each year and still have enough money to last their lifetime,” says Fred Reish, an IRIC member and a partner at Drinker Biddle & Reath LLP, who co-authored the issue brief. “However, given the statistical chance that at least one spouse in a married couple age 65 will live another 30 years, ‘safe’ withdrawal rates are much less than most retirement plan participants think. In fact, anything greater than 6% results in a significant risk of exhausting retirement funds while the individual is still alive. This will be shocking to many participants.”
Register or login for access to this item and much more
All Employee Benefit Adviser content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access