How New Retirees Can Spend More Without Risking Their Savings

Investing Insights

Morningstar, Ivanna Hampton, Sarah Hansen

Investment, Analysis, Mutual, Economic, Funds, Business, Christine Benz, Entrepreneurship, Trading, Independent, Finance, Investing, Bonds, Morningstar, Advice, News, Stocks, Etfs, Ideas

4.2 • 537 Ratings

🗓️ 23 January 2026

⏱️ 24 minutes

🔗️ Recording | iTunes | RSS

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Summary

Plus, the trade-offs new retirees should be prepared to make.

Transcript

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0:00.0	Please stay tuned for important disclosure information at the conclusion of this episode.
0:10.8	Welcome to Investing Insights. I'm your host, Ivanahampton. If you're newly retired or we'll
0:17.1	join the rank soon, it's time to think about how you plan to spend your nest egg.
0:22.1	Morningstar researchers are helping new retirees figure out where to begin.
0:26.2	The recently published State of Retirement Income Report concluded that the starting
0:31.3	safe withdrawal rate for people beginning their retirement in 2026 is 3.9%.
0:36.8	That number might seem low.
0:39.2	However, the team has analyzed several strategies to lift it to almost 6%.
0:44.6	Morningstar portfolio strategist Amy Arnott has investigated the data and is here to explain
0:50.1	flexible withdrawal strategies.
0:52.9	It's great to see you, Amy.
0:54.7	Great to see you too.
0:56.1	You and your fellow researchers determine the starting safe withdrawal rate for new retirees is 3.9%.
1:03.6	Can you give an overview of what went into that estimate and what it means?
1:08.6	Sure.
1:09.1	So we started out by coming up with some return estimates
1:13.6	going out over the next 30 years. And then because there are estimates, there are many different
1:20.4	things that could happen. So we ran a thousand different kind of return paths as part of a Monte Carlo simulation.
1:29.3	And then we looked for the highest starting safe withdrawal rate
1:33.7	that ended up with a positive portfolio balance at the end of the 30-year period,
1:40.0	at least 90% of the time.
1:43.4	And so what that means is with the 3.9% number, you use that percentage and your starting portfolio
	...

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