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Most Don’t Know Good Drawdown Rate — But it’s Getting Closer

A new survey says that 77% of Americans over the age of 40 don’t know how much they can withdraw without running out of money, though it’s hard not to see that as a conservative figure.

The survey, conducted by Ipsos Public Affairs on behalf of New York Life, says that 23% of respondents realize they can do so by withdrawing less than 5% of their retirement savings annually. That, by the way, is up from 10% who held that opinion a decade ago.

More than half of the Americans over age 40 (58%) in the survey overestimated this safe withdrawal rate, while nearly one in five (19%) admit they do not know how much to withdraw without running out of money in retirement.

And then there was the third (31%) of respondents who believe they can spend 10% or more of their savings each year. At that rate, based on historic investment returns, retirees risk running out of money in about 11 years or less, according to the report.

The survey also found that:

  • 58% of Americans are interested in learning about how to turn their savings into retirement income for life, up from 25% a decade ago; and

  • 64% of pre-retirees say they are interested in learning about how to create their own pension-like income in retirement.