Once you determine a sustainable annual withdrawal rate, you can generally use one of these two basic methods to withdraw money:

1. Dollar-adjusted withdrawals involve taking out an initial base amount and adjusting it annually for inflation. This method:
• Provides a consistent, inflation-adjusted cash flow.
• May deplete your savings too quickly if the markets experience a downturn.
2. Percentage withdrawals involve withdrawing a certain percentage of your portfolio's value each year. This method:
   • Provides annual withdrawal amounts that fluctuate depending on your account balance, so you may have to adjust your spending if your balance drops because of a market downturn.
   • Increases the likelihood that your savings will last throughout your retirement.

The chart illustrates the different effects of these two withdrawal methods on a $500,000 retirement account over five years. As you can see, dollar-adjusted withdrawals increase steadily, while percentage withdrawals fluctuate but leave $20,041 more in the account after five years.

Compare Dollar-Adjusted Withdrawals With Percentage Withdrawals
In this example, withdrawals are taken at the beginning of each year.
	Returns (%)	Dollar-Adjusted Withdrawals ($)1	Account Balance ($)	Percentage Withdrawals ($)2	Account Balance ($)
Initial Balance	-	-	500,000	-	500,000
Year 1	8	25,000	513,000	25,000	513,000
Year 2	-5	26,000	462,650	25,650	462,983
Year 3	-6	27,040	409,473	23,149	413,443
Year 4	12	28,122	427,114	20,672	439,904
Year 5	0	29,246	397,868	21,995	417,909
This hypothetical example is for illustrative purposes only and does not represent any actual products or investments.

1 5% of initial portfolio balance adjusted annually for 4% inflation
2 5% of portfolio balance