Financial Planning

How Much Should You Withdraw from Your Retirement Fund?

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If you withdraw too much, you risk running out of funds and if you withdraw too little, you may not enjoy the dream retirement you planned for. So how much is just enough?

One frequently used rule of thumb is the 4% rule which says, add up all your investments and withdraw 4% of the total value in the first year of retirement. If the cost of living rises in the coming years, factor that in the funds you’d withdraw then. The 4% rule should be considered more like a guideline than a strict rule.

Keep in mind, expenses may not be consistent every year, we may spend more one year and less the next. So, the withdrawal plan should be flexible enough to factor in additional expenses including the rise in cost of living or inflation, taxes, etc.

Also, determine how much of the retirement fund would you spend and how much would you wish to leave behind. Basis this calculation, decide your future investments and withdrawals. Considering the life expectancy and funds at hand, you would be able to arrive at a reasonable cut.

Edelweiss Tokio Life – Wealth Secure+, one of our most popular savings + protection plan offers Limited Pay feature. One can pay premiums till a certain age and the life cover can extend up to 100 years of age – which means you can pay premiums during your working life and continue to avail a life cover long after that. It also offers a Systematic Withdrawal Plan benefit which essentially means that you can receive regular payouts from the funds you save up, not to forget the fund additions like Booster, Maturity and Loyalty Additions that get included in the fund value on long-term investments. This makes Wealth Secure+ a good retirement plan.

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