Because they provide predictability,
ease of planning, and flexibility, systematic withdrawals
might be a useful way for you to manage your investments
and finances. Also called periodic or automatic withdrawals
or installment payments, systematic withdrawals let you
set a schedule — monthly, quarterly, semi-annual,
or annual — to receive regular payments from your managed
account, mutual
fund, qualified
retirement plan, or IRA.
You can even take systematic withdrawals from a deferred
annuity up to a certain limit before the payout period
begins, without surrender charges.
One of the greatest advantages of setting up a systematic withdrawal plan is
that you can make changes or cancel at any time. So if your expenses change or
your account balance fluctuates, you can adjust your withdrawals easily.
Your
options
You have three basic options for the amount you
receive:
A fixed dollar amount,
which you setA
specific type of fixed dollar amount designed to
pay you the entire value of your account over a
certain period of time A
percentage of your account value One of
the things you may want to keep in mind as you
choose among them — or choose different approaches
for individual accounts — is that some retirement
analysts advise taking no more than 4.5% of your
account value each year if you want your accounts
to last for 30 years. Others suggest you may be
able to withdraw up to 7% annually.
