Retirees, a Rich Life Does Not Require Spending More Money

November 6, 2024 by Harry Sit in Retirement 24 Comments Keywords: early retirement, lifestyle design, safe withdrawals, travel

“How much can I safely withdraw from my portfolio?” is a frequently asked question among pre-retirees and new retirees. Ben Felix said it was 2.7%. Morningstar said it was 4.0%. Bill Bengen said it was 4.7%. Dave Ramsey said it was 8%. The higher the safe withdrawal rate, the more retirees can spend from their investment portfolios.

Researchers developed methods to raise the safe withdrawal rate. Some suggested using a guardrail system. Some suggested using annuities, whole life insurance, or a reverse mortgage. In any case, the implied message is that it’s desirable to have a higher withdrawal rate.

You also hear that it’s a challenge for new retirees to switch from saving to spending. Some financial advisors say a big part of their role is to encourage clients to spend more money. I also know YouTube and podcast shows that scold people for not living a rich life. A popular book Die With Zero encourages people to spend more money when they’re still young.

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