A lower withdrawal rate can help your retirement savings last longer, but it may also limit how much you spend. Moving from 4% to 5% gives you more income upfront while leaving less room for your portfolio to absorb market losses. Your decision will depend on the answer to this question: Is the extra money worth taking on more risk?
What Changes When You Withdraw 5% Instead of 4%
The 4% rule is a common benchmark for estimating sustainable retirement withdrawals. It generally starts with 4% of your portfolio in the first year and adjusts that amount for inflation thereafter. Raising the rate to 5% would increase your income but puts more…
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