Drawing down a nest egg is harder than building it. Here are some strategies to help retirees spend with confidence.
One potential downside: The tables are conservative, which may lead to lower-than-desired annual spending.
PGIM's Blanchett prefers this method, since it's simple and more responsive to retirees' current state of health. Pfau of The American College prefers this method because it responds to market movements, but still keeps spending within a range.The floor is most important, he said. A household would budget how much money it needs to live and still be comfortable.
It piggybacks on the 4% rule methodology, but with a key difference: In years when the market performs well, retirees get a 10% raise in addition to the inflation adjustment and a 10% pay cut in down markets.