The 4 percent rule is a suggested guide for withdrawing funds from your savings accounts during retirement. The rule states you should withdraw 4 percent in your first year and then withdraw the same amount, adjusted for inflation, for each year thereafter. This rule ensures you will not run out of money while you are still alive, and it aims to make sure you do not make the mistake of being too conservative with your withdrawals, leaving too much in the account after you pass away. While the rule is a good guideline, it does not account for various issues.

Required Minimum Distributions

One factor you should consider is the required minimum distribution (RMD) imposed on you by the IRS on any of your retirement accounts. This amount is calculated based on the sum of money in your accounts and your life expectancy. The IRS will inform you of your RMD the year you turn 70-1/2. An individual with multiple retirement accounts will be required to withdraw funds from each one. Obviously, if you are required to withdraw more than 4 percent, then you cannot abide by the 4 percent rule.

Age of Retirement

The 4 percent rule does not account for the time of your retirement. An individual retiring very young will have to be more careful not to burn through a fund. On the other hand, a person with a late retirement date will have to live off the accounts for a much shorter period of time, and this individual may want to withdraw more than 4 percent on an annual basis. The goal is always to make sure your money lasts as long as you need it, but it is also unwise to leave too much money in the account, living on a lower salary than you need to live on, if you retire late.

Affect of Earnings

Some investors are simply more successful than others. While your retirement accounts are active, even after you begin withdrawing, they will still be growing due to your investments through these accounts. This means you may be, in a good year, putting more money into the fund than you are taking out if you earn more than 4 percent. Growing your retirement accounts after you have retired makes little sense. If you are making a lot of money in the accounts, you may want to withdraw more than 4 percent.

Amount of Savings & Public Support

Simply put, some people will rely more heavily on their personal retirement accounts than others. If you were a high earner during your working years, your personal retirement accounts will provide you with a much higher income than Social Security or other forms of retirement benefits provided by public services. However, if you did not earn enough to save up a large account, you may be more reliant on these public services. The goal is to maintain the quality of life you had prior to retirement. The degree to which you use other savings and services must be taken into account. This may mean you withdraw less than 4 percent, and it may mean you withdraw more. 

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