Teresa Ghilarducci, Columnist

Retirees, Forget the 4% Withdrawal Rule

With stock and bond returns uncertain and inflation looming, the old rule of thumb on how much to take out annually needs to be tossed.

June 30, 2021 at 11:30 AM UTC

By Teresa Ghilarducci

Teresa Ghilarducci is the Schwartz Professor of Economics at the New School for Social Research. She's the co-author of "Rescuing Retirement" and a member of the board of directors of the Economic Policy Institute.

Good things come to those who wait.
*Photographer: Valerie Macon/AFP*

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Let's say you're one of the lucky ones and have accumulated $1 million in your 401(k) retirement account after years of working. But, like many, maybe the pandemic has made you second guess being in the office and your employer is pushing older employees along. So you’ve decided to retire.

How can you safely withdraw the $1 million and not run out of money before you die? You're probably considering two main options: Live for the moment and cash out the money as needed, or cut back and conserve to ensure it lasts for the rest of your and your partner’s life. Both decisions are wrong.