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The analysis: Keep in mind, these findings don’t blanket the financial situation of all new retirees. For one, the research was based on a sample client with a 30-year time horizon, a portfolio of 50 percent stocks, 50 percent bonds and a request to secure a 90 percent probability of not outliving money. Additionally, the sample client was assumed to be making inflation adjustments to their withdrawals every year.

The caveats: While today’s withdrawal rate is higher than it was a year ago, portfolio values have declined throughout 2022. Also, this research may not completely follow the real spending pattern of retirees. According to former podcast guest, David Blanchett, retirees spend less over time in retirement (not even enough to keep pace with inflation), but may spend more in their final years due to medical or long-term care costs. In this instance, the “safe” withdrawal rate for a new retiree could increase to 4.3 percent.

Other withdrawal strategies: This study utilized a fixed real spending system in its analysis, but when other withdrawal strategies were incorporated, the result was more variability in cash flow. For example, forgoing inflation increases and taking a 10 percent income reduction after a portfolio loss slightly increased cash flow. Additionally, the “guardrails strategy”, which takes withdrawals in line with RMDs, increased the starting withdrawal rate and rates thereafter, but provided less certainty in cash flow throughout the years.

Bottom Line: Some big wins have happened for you over the last year or so. Keep in mind that with increases in interest rates and depressed market valuations come opportunity.