Seniors may be retiring earlier these days due to the decade-long growth in their retirement portfolios and poor job prospects due to their age bracket. While data suggests unemployment data for seniors is high, it may not be taking into account that some seniors are choosing not to return to the workforce.
With a stock market at an all-time high, many seniors choose to begin withdrawing money from their portfolios and start life without the nine-to-five. However, financial strategists caution seniors to evaluate the traditional four percent rule. Based on a theory created in the 1990s, someone who pulls out four percent per year offers retirees a low risk of running out of money over a 30-year retirement. Many factors fold into your decisions, such as your fixed costs, social security, and pension payments, not to mention your age, health, and life expectancy.
If half of your portfolio is in stocks and you pull out a consistent four percent during peaks in the stock market, and there is a precipitous drop, you have less to find growth with when an upturn occurs. Financial strategists argue that 3% is the new 4% today.
Read HERE for an overview of some issues to consider when retirement is on the horizon.