Pathways

Withdrawal Rates

YOU’LL NEED A PLAN

can be, the price of a stamp purchased for 5¢ in 1967 costs 57¢ today* – an increase of 1,140% in 43 years.
DETERMINING A SAFE RATE OF WITHDRAWAL

there will be many factors you will need to consider. To help illustrate the need for careful planning when determin-
ing your rate of withdrawal, we can use a simple case study.
CASE STUDY: MEET RICK

his withdrawal rate by the same amount each year (i.e. indexing), how long could he expect his money last?

-
ing equal, lets see what happens if Rick decides to increase his withdrawal rate to 7% (indexed), or $70,000 per

1,400,000

4% In this example, he can expect Rate of withdrawal Years money lasts*

1,200,000 6%
8%
4% 49

1,000,000 5% 32
And if Rick increases his with-
INVESTMENT VALUE

6% 25
800,000
drawal rate to 10% (indexed)? 7% 20
600,000
8% 17
400,000 9% 15
when you consider that at 5%, 10% 13
200,000
the money can last almost three * These numbers are based on a 6% rate of return, an inflation rate of 3%
0 and a taxation rate of 45%. The withdrawal in the last year is not necessarily
10 20 30 40 50 60
equal to the purchasing power of the other years.
YEAR

For more information, contact your advisor

John Sabourin, BA, B.Comm, FLMI, CFP
Source: Canada Post, June 2010 (519) 675-1177 | 1-888-327-5777 | John@selectpath.ca