Your own investments might carry more or less risk than what we have assumed, which will change your expectation of returns. The rules of thumb are based on an assumption that people invest in a diverse portfolio of different assets including some stocks and some bonds. It does not take into account tax relief on pension contributions, or any additional tax due on the income taken from those pensions.It does not take into account the Annual Allowance or Earnings Cap limiting the amount that you can contribute to a pension.It does not take into account the Lifetime Allowance on the overall value of your pension savings.In particular, this means that it does not take into account limitations or tax treatments of individual investment products. The rules of thumb do not take into account the product that your savings are in - whether you are saving in an ISA, or a pension, or anything else. This shows how much they may want to withdraw each year. The Smith's have £180,000 in retirement savings and plan to retire at age 68. This will give you a starting point which can be adjusted annually for inflation.ġ Fidelity International’s Retirement Savings Guidelines white paper. The graphic below shows how this could work, if you are looking for a steady amount of income from your retirement savings. You would then need to withdraw less in the later years. For example, you might want to withdraw more in the early years to spend on home renovations or travel. However, it’s important to remember that this is just a rule of thumb. Our research 1 shows that a potentially sustainable rate is to withdraw between 4% and 5% of your household retirement savings in the first year of your retirement – and then adjust that amount every year for inflation.
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