After decades of saving and investing to achieve your retirement goals, you’re ready to finally enjoy the fruits of your labor. However, you may still be wondering, “How much can I spend to enjoy this next chapter of my life while still making sure I have enough to get me through retirement?”

It’s an important question because how much you withdraw from your portfolio each year can play a big role in how long your money could last. We’ve put together three tips to help you determine the best withdrawal rate for you.

1. Adhere to a sustainable withdrawal rate.

While the 4% withdrawal rate has been the industry guideline for decades, it’s important to remember that it’s just that — a guideline. Everyone’s situation — and ideal retirement — is different. Some may want to spend most of their retirement traveling the world (and therefore have a higher withdrawal rate), while others may prioritize leaving a sizable legacy to their loved ones or charities (and therefore have a lower withdrawal rate). Moreover, those who are farther into their retirement are more likely to sustain a higher withdrawal rate than those who have recently entered retirement.

Whatever your retirement goals are, you should generally adhere to a withdrawal rate that will allow your nest egg to last throughout your retirement. Your Edward Jones financial advisor can help determine a reasonable (and sustainable) withdrawal rate that aligns with your retirement goals.

Our guidance for withdrawal rates in the first year of retirement below can serve as a good starting point to determine if your strategy is realistic. This guidance assumes you’ll spend a bit more each year to account for inflation and that you’ll live until at least age 92.

Initial withdrawal guidance

Initial withdrawal guidance

Age in retirement

More conservative

Less conservative

Early 60s3.0%3.5%
Late 60s3.5%4.0%
Early 70s4.0%5.0%
Late 70s5.0%7.0%

*Withdrawal rate guidance is based on estimates of the probability of different portfolio allocations lasting to age 92 and assumes withdrawals increase by 3% annually for inflation. We assume the portfolios have a mix of cash, fixed income, and equities. Expected returns based on long-term capital market expectations for cash of 2.46%, fixed income of 3.10% to 5.56%, U.S. stocks of 6.72% to 8.19%, and international stocks of 8.49% to 9.72%. We also assume an annual fee of 1%. Withdrawal rates can include the withdrawal of principal. If preservation of principal is a high priority, you may need a lower withdrawal rate. In general, the higher your withdrawal rate, the greater the risk your money may not last throughout your time horizon.

2. Adjust your withdrawal rate as needed.

While sticking to a sustainable withdrawal rate is key to helping ensure you don’t deplete your investment funds, it’s important to remain flexible, especially during market downturns. This might mean lowering your withdrawal rate, or at least not taking your annual raise, during market volatility. Your Edward Jones financial advisor can help you determine if your spending strategy should change depending on the strength of the market. Being flexible with your spending can also help your money last as long as you need it.

3. Align spending with your goals and values.

When you think about why you wanted to save and invest for your retirement, what sort of lifestyle did you envision? You probably saw yourself spending more time with loved ones, exploring your hobbies, traveling extensively or donating to your favorite charities. As such, it’s important to spend some time reflecting on whether your current spending aligns with the goals and values you set for yourself leading up to your retirement.

While you certainly shouldn’t live beyond your means, you also want to enjoy the retirement you worked so hard to achieve. Your Edward Jones financial advisor can help you create (or refine) your withdrawal strategy to make sure your money lasts throughout retirement.