A general rule-of-thumb is to withdraw no more than 4% of your retirement savings per year.

Since your retirement money has to last you for the rest of your life (and in most cases, your spouse’s), it’s extremely important to carefully calculate how much you can withdraw each year without risking running out of money. Retirees should avoid withdrawing more than 4% of your total retirement assets in any given year, and that’s assuming that your assets are invested for growth over time (with some equity exposure).

Most financial advisors have the ability to run a Monte Carlo Simulation which tests the sustainability of your withdrawal rates against your level of assets and hypothetical market fluctuations. If possible, it also makes sense to avoid making withdrawals in down years, so as not to put too much downward pressure on your portfolio’s value.

Bear in mind also that the government requires you to start withdrawing money from your IRA at age 70½.

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