What’s a Safe Withdrawal Rate in Retirement?What’s a Safe Withdrawal Rate in Retirement?

What’s a safe withdrawal rate in retirement? For years, the rule-of-thumb answer has been 4 percent, adjusted annually for inflation. But a growing number of financial planning experts are re-thinking that number.

“Advisors are getting the question a lot these days from clients,” says Maria Bruno, a senior investment analyst in Vanguard’s Investment Counseling and Research group. “Until a decade ago, a balanced portfolio could provide four percent purely from returns, and some retirees were still accumulating funds. Now, with interest rates so low, the question is whether retirees can still spend that amount, and how they can build a portfolio to sustain it.”

This is an area where clients will need hand-holding and education. In a 2011 Fid...