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Today's question comes from Isaac in Nevada.

I'm two years out from retiring.

I'd like to know the best strategy on how to start withdrawing funds from my 401k.

Do I change the dividends to not reinvest?

Is there a certain percentage that's safe to withdraw every month or year?

And if so, how often should I withdraw?

Hmm. Okay.

Well, what I would do is sit down with your financial planner, your smart investor pro, if you have one, or your advisor. Okay. Well, what I would do is sit down with your financial planner, your smart investor pro if you have one or your advisor, and help them have them crunch some numbers with you.

The stock market has averaged 12%, 11.8% since it began. Okay.

Inflation has averaged for the last 40 years, 50 years, somewhere around 4.2%. It's below that right now.

It was above that during President Biden's tenure.

Due not to President Biden, but due to inflation, I'll just make a comment and keep rolling.

Protect him just a little bit there. He got blamed for something that wasn't his. Anyway, but inflation comes and goes, in other words, and so to returns. Last year, you would have made over 20% on your money. The year before, you would have made over 20% on your money. The year before that, you wouldn't have made that. So just go back and look at some of the track record on the market. Now, if your funds

are invested, figure out what they're averaging, have been averaging over the last many years

and what you think they're going to average. But let's just use some easy numbers. Let's pretend

that your funds are like mine, and they're averaging around 12. Again, I made 26 last year, but they're

averaging around 12, okay? And inflation's four. So if I draw out 12, the value of my nest egg

starts to go away at the rate of inflation. The math is all still sitting there.

If I only pull off the income and I let the nest egg sit there, that's fine.

But a million dollars 10 years from now because of 4% inflation, it won't buy as much as it buys today.

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