How Much Can You Spend in Retirement? Fund Giant Sets Out Two Ways to Draw Down Savings

Capital Group says retirees comfortable with market swings may be able to withdraw up to 5.5% annually from their nest egg, above the traditional 4% rule (Credit: Vitaly Gariev/Pexels)

The 4% rule has long served as a rule of thumb for Americans drawing down a 401(k), the US workplace retirement account. Capital Group has now set out withdrawal rates of up to 5.5% a year for some retirees, provided they can accept income that rises and falls with investment performance.

The US investment manager published two withdrawal ranges on 21 October. Retirees seeking more predictable income are pointed towards an initial rate of 4% to 4.5%. A variable approach offers 5% to 5.5%, but annual payments move with the account balance.