Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton. New retirees might enter a different environment than their predecessors.

The economy or market might have changed slightly or dramatically.

Morningstar researchers have investigated and identified their latest starting safe withdrawal rate.

Here's a hint. It's slightly lower than the previous year. I asked Morningstar Inc. portfolio

strategies Amy Arnott, why? We also talked about a new metric that can help people figure out if they're spending too little or too much. Here's our conversation.

Welcome back to the podcast, Amy. Thanks. It's great to be here. Now, you and your co-authors recently published your anger report on the state of retirement income. Can you talk about the main goal of this research and how it's different from other research that look at retirement income strategies?

Well, the main goal with this research was to try to estimate how much can you safely withdraw from your portfolio during retirement. And this is a difficult question to figure out, and actually probably one of the most difficult

questions that people will ever face during their financial lives.

You know, if you're saving for retirement, it's pretty straightforward as long as you start early

and you're consistent about it. But when it comes to taking your retirement, it's pretty straightforward as long as you start early and you're consistent about it.

But when it comes to taking your retirement portfolio and figuring out how to turn that into a paycheck for yourself,

that gets much more complicated. So, you know, the danger is a lot of people are worried about possibly running out of money during

retirement. But on the other hand, a lot of people actually end up underspending. So there's sort of a

balance between you want to make sure that you're spending enough so that you can enjoy your

retirement and enjoy hobbies and travel, that kind of thing, but not spend too aggressively so that you can enjoy your retirement and enjoy hobbies and travel, that kind of thing,

but not spend too aggressively so that you might have to cut back later in life.

The way this research is different from other research out there is most retirement withdrawal research

is traditionally based on looking at historical market data. So this started

out with William Bangen, with his landmark paper in 1994, which was based on looking at market

data, going back to 1926, and figuring out what's the highest withdrawal rate you could have made that would have survived,

you wouldn't have depleted the portfolio in every past period.

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