How much money should you spend during retirement? That’s the question a lot of people have leading up to, and in the first couple years of retirement.
The most important implication of retirement spending is whether or not it will last. The worst fear of most newly retired people is running out of money later in life.
One common piece of wisdom that people used to refer to was known as the 4% Rule (or 4.5% depending on who you ask). It said that one could withdraw four percent of their retirement savings in the first year of retirement, and then each subsequent year withdraw that same amount plus the cost of inflation.
But this new post on Get Rich Slowly calls that rule into question, specifically the assumption that retirement spending will be (or should be) level over time. Typical retirements have years with higher expenses due to things like health-related costs, that must be accounted for.
For a deeper explanation of retirement spending, read the full article here.