The sustainable retirement rate is the estimated percentage of savings you can withdraw each year during retirement without running out of money. As an estimate, try to withdraw no more than 4 to 5% of your savings during the first year of retirement and then adjust that amount each year to account for inflation. Rob is a contributing editor for Forbes Advisor, host of the Financial Freedom Show, and author of Retiring Before Mom and Dad: The Simple Numbers Behind a Lifetime of Financial Freedom. We believe that achieving a trust level of 75 to 90% is right for most people, and it sets a more comfortable spending limit if you can maintain flexibility and adapt if necessary.
Cash and bonds, on the other hand, can add stability and can be used to finance spending needs early in retirement. And if you were born in 1960 or later and can wait until age 70 to apply for it, you'll receive a bonus called “delayed retirement credits,” which will raise your monthly benefit to approximately 124% of what you would have received at full retirement age. If you review your plan regularly and are flexible if conditions change, 75% provides a reasonable level of confidence between overspending and spending less. The income that people need varies widely and should reflect their own expenses and how you want their retirement to be, says Silvia Tergas, financial planner at Prudential Advisors.
The same projected returns, updated annually, are used in Schwab's retirement savings and spending planning tools and calculators.