short quiz to see how you stack up against over 32,000 others who have taken the quiz. This quiz is part of an article by Mary Beth Franklin, Don't Run Out of Money in Retirement.
A couple of points in the article worth mentioning. First, recent research by Webb and Wei Sun of China's Remin University found that basing withdrawals on the required minimum distribution approach set forth by the IRS may be optimal. RMDs are required at 70-1/2 and are based on an individual's life expectancy.
A second point, made at the very end, is that rules of thumb can be dangerous. The withdrawal rate needs to be constantly reevaluated. For instance, for much of the period over which studies are performed, bond prices rose as stocks declined. In other words, bonds acted as a hedge. Today markets face yields at historical lows, and the possibility exists that both fixed income and equity markets could decline at the same time over a protracted period. This is just one significant way that the present environment differs compared to the past. Others include medical costs and globalization. The point is to reevaluate at least yearly.
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