8. Plan your withdrawal strategy<\/p>\n
Once you retire, your focus may shift from saving to spending. A sustainable withdrawal strategy<\/a> can help you avoid running out of money.<\/p>\n Tips for building a sustainable withdrawal plan:<\/p>\n Align withdrawals with your investment mix and market conditions. Fidelity suggests a conservative drawdown rate\u2014typically 4%\u20135% of your savings in year one, then adjust for inflation annually.<\/p>\n For example, if you\u2019ve saved $1 million, a 4% withdrawal rate would mean taking $40,000 in year 1. In year 2, you\u2019d increase that amount based on inflation to maintain your purchasing power.<\/p>\n When the market dips, it could make sense to rein in discretionary spending to limit withdrawals if your investments are down. \u201cThat\u2019s why Fidelity suggests using guaranteed income for essentials. When discretionary expenses are covered by your portfolio, you may have more flexibility when it comes to adjusting your spending,\u201d Davin says.<\/p>\n Read Fidelity Viewpoints: How to manage cash flow in retirement<\/a><\/p>\n
\nConsider guaranteed income (like Social Security or annuities) to cover essentials.
\nHaving accessible funds (cash, CDs, money markets) can help you avoid selling other investments during downturns.<\/p>\n