Articles for Financial Advisors

Withdrawal Assumptions

Withdrawal Assumptions

Suppose you have a client with $1 million who needs current income for the next 30 years. Assuming a constant annual after-inflation investment return (ranging from +5% down to -5% per year), here is how much the client could spend each year for the next 30 years (source: WSJ):

 

Return*

Spend**

 

Return*

Spend**

5%

$65K

-1%

$28K

4%

$58K

-2%

$24K

3%

$51K

-3%

$20K

2%

$47K

-4%

$17K

1%

$39K

-5%

$14K

0%

$33K

 

 

* Return earned each year after adjusting for inflation
** Amount that can be spent each year for the next 30 years
 

 

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