Ultimately, you'll face at least one of two huge retirement risks: 1.) Running out of money or 2.) Running out of life. One will get you before the other does, but neither one of them is necessarily pleasant to face unprepared. If you run out of life before you run out of money, somebody else will enjoy the rewards from your thrift. If you run out of money first, then you wind up destitute at a stage in your life when you're less likely to be able to go back to work.
The classic strategy is the 4% rule. In essence, you withdraw 4% of a well-diversified portfolio in your first year of retirement. If your portfolio can throw off more than 4% in cash, you can take it as income without selling off the stocks that generate it. If those stocks raise their dividends faster than inflation, your purchasing power can keep pace, too.
Source: Motley Fool
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