Investing · Module 9 of 11
Spending what you saved
How much you can take out each year in retirement without running out, and why the order of good and bad years matters.
Key terms in Spending what you saved
- Withdrawal rate
A withdrawal rate is the portion of a retirement portfolio that a person takes out in a given year, usually stated as a percentage of the balance. Regulators note that retirees often adjust it in response to investment results and prices. A rate that is too high relative to the portfolio's performance can leave a balance depleted sooner than planned.
- Fixed annuity
A fixed annuity is a contract with an insurance company in which the insurer guarantees both the interest rate credited and the payout. The payments are therefore set in advance and do not move with markets. The guarantee depends on the financial strength of the issuing insurer, and such contracts are regulated mainly at the state level.
Source: FINRA, Annuities
- Variable annuity
A variable annuity is an insurance contract whose value depends on how the underlying investment options perform. Those options are typically funds holding stocks, bonds, or money market instruments chosen by the owner. Returns are not guaranteed, so the balance and later payments can rise or fall.
Source: FINRA, Annuities
Every term on Lever is in the money glossary.
About this module
Spending what you saved is part of Investing, one of 15 subjects in Lever. It’s a short run of 5 lessons, about 13 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
More in Investing
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1
Why money cannot sit still
Why cash slowly loses value, what it means to put money to work, and which money shouldn’t be invested at all.
7 lessons -
2
What risk actually is
What risk really means, why higher returns come with bigger swings, and how much ups and downs you can live with.
9 lessons -
3
What you can actually own
Stocks, bonds, funds and index funds explained, plus the yearly fee that never sends you a bill.
10 lessons -
4
Actually starting
Open the account, start small, invest a set amount on a schedule, and keep an eye on fees.
7 lessons -
5
The days you cannot pick
Why staying invested usually beats trying to time the market, and why the latest news is a poor guide.
5 lessons -
6
The account with a tax break
Retirement accounts with tax breaks, free money from an employer match, and paying tax now or later.
5 lessons -
7
Limits, locks and deadlines
How much you can put into tax-advantaged accounts, the cost of taking money out early, and the deadlines to know.
6 lessons -
8
Moving it and naming it
What happens to your retirement account when you change jobs, and accounts meant for one specific purpose.
5 lessons -
10
The mix that shifts
Choosing your mix of investments, rebalancing when it drifts, and all-in-one funds that do it for you.
7 lessons -
11
Choosing where it goes
Which account to fill first, which investments to keep where, and how to do it all if you work for yourself.
6 lessons
Try this module
It’s part of Investing. Lever will bring it to you when you’re ready, or you can go straight there.