Secrets to Successful Withdrawal Strategies during Retirement

Secrets to Successful Withdrawal Strategies during Retirement
  • Opening Intro -

    As we approach retirement, we begin to seriously think about whether or not we’ve set aside enough to sustain us comfortably through our retirement years.


You ask: What does my 401K look like? And what about my investments — do I have a good, solid nest egg I can dip into for leisure activities like taking a trip? Do I have enough savings not to have to worry about my day-to-day expenses? Can I afford a personal caregiver or a spot at a comfortable retirement home, should I eventually need one?

Retirement planning doesn’t – or shouldn’t – start only when you start to feel old. It’s something you should do as soon as you’re in your first job and supporting yourself.

Finding the right assets to invest in early on will help you have something to fall back on after retirement. However, it is just as essential for you to have flexibility in your investments: you should be able to withdraw reasonable amounts to cover what you need at a moment’s notice without compromising the rest of your investments.

Withdrawing during Retirement

There are many rules that apply to when and how much you can withdraw during retirement. It all depends on what you need, and when. Our needs change over time, and we have to be able to adjust the amount of our liquid – and potentially disposable – assets accordingly. This is to ensure that you have enough to cater to your daily needs without sacrificing your current lifestyle.

Sound financial planning never ignores realities. It takes real needs and wants into consideration while you’re determining the most ideal processes and strategies for efficient savings – and spending – for when you finally do retire. How much will you need to sustain your lifestyle? How much of your retirement funds can you reasonably withdraw over what period of time without spending it all before you die?

How much can you withdraw?

Again, the answer to this is that it all depends on various factors. A safe withdrawal rate is mostly guided by the current financial condition a retiree is in, vis-à-vis the current financial environment.

Aside from market conditions, how much you can – or should – withdraw also depends on the stage of retirement you are in. There are generally three stages: In the first stage, retirees spend the most money, as they essentially maintain the same lifestyle they had prior to retirement. Between the ages of 70 to 84, the second stage, most retirees start to slow down, leading to a drop in expenses of as much as 30%. Beyond 84, the third and last stage, retirees spend even less, so withdrawals are generally fewer, and for lower amounts.  If a serious medical situation presents itself, then this general rule does not apply as healthcare expenses can eat away quickly at your savings if you don’t have long-term care insurance.

Successful Withdrawal Strategies

In a study, the American Institute for Economic Research analyzed eight different withdrawal methods. Some of the key takeaways from the study are:

  • The first five to 10 years of retirement will have a dramatic impact on the long-term success of investments. Modest withdrawals early on can offer better odds of success over the course of the retirement. Sticking to moderate withdrawals during the first years of retirement makes the most sense for those interested in continuing working.
  • Withdrawing 3% to 5% of assets is prudent. Initial withdrawals beyond 5% should only be considered if you can make do with substantial reductions in future withdrawals, should your anticipated returns not pan out. Withdrawals below 3%, on the other hand, should only be considered if you are an investor with an aversion to risks, or if returns are expected to be so low that they won’t be worth the effort.
  • Flexible strategies simulate better outcomes. Strictly adhering to the 4-percent rule often leads to depleted assets because it ignores investment returns. It’s better to structure withdrawals to increase and decrease depending on the performance of your investments.

There are several withdrawal strategies you can take advantage of, but the right ones will always be unique to you, and representative of your specific needs and investments. Finding the right strategies may take a bit of work, but the effort will be well worth it. Good financial planning is key to enjoying your retirement to the fullest.

AOG Wealth Management serves investors in the Metro DC area. AOG helps their clients reach their full financial potential, working with clients to achieve their unique goals. For more information about AOG and other retirement planning topics, check out the AOG Wealth Management blog.
Securities offered through Kalos Capital, Inc. located at 11525 Park Woods Circle, Alpharetta, Georgia 30005 and/or TD Ameritrade Institutional Services located at 5010 Wateridge Vista Dr., San Diego, California 92121-5775. Investment advisory services offered through AOG Wealth Management, Inc. AOG Wealth Management, Inc. is neither an affiliate nor subsidiary of either Kalos Capital, Inc. or TD Ameritrade Institutional Services.


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