Retirement withdrawal strategy: how to make sure your money doesn't run out before you... stop needing it

Throughout your working life, you focus on one question: how to accumulate enough money to retire. But when retirement day arrives, a new question emerges, equally challenging: how to withdraw that money to last 20–30 years without running out prematurely? This is a rarely discussed but critically important part of retirement planning.

Why is withdrawing money so difficult?

The paradox of retirement is that you must simultaneously manage two opposing risks:

• Withdraw too much → your money runs out while you're still alive and need it.
• Withdraw too little → you live frugally unnecessarily, not enjoying the fruits of a lifetime of savings.

The goal is to find a sustainable withdrawal rate in the middle — enough to live comfortably while your assets last long enough.

The 4% rule — a classic starting point

This is the most common reference principle in retirement withdrawal planning:

> In the first year, withdraw about 4% of total assets. In subsequent years, adjust the withdrawal amount for inflation.

The core idea: if you only withdraw about 4% each year, the remaining assets — still invested — have a chance to generate enough returns to compensate, helping the portfolio survive for decades.

Example: with a portfolio of 6 tỷ đồng, in the first year you withdraw ~240 triệu (4%) to live on, or 20 triệu/month. In subsequent years, you increase the withdrawal amount by inflation to maintain purchasing power.

This is also the origin of the "rule of 25" when calculating your retirement number: withdrawing 4% annually is equivalent to needing assets worth 25 times your annual expenses.

The 4% rule is not an immutable law

This is an important point to understand correctly: 4% is a starting estimate, not a magic number. You should be flexible:

• Years when the market drops sharply: consider withdrawing less, cutting discretionary spending to avoid selling assets at low prices.
• Years when the market is favorable: you can be more generous.
• As you get older and time remaining shortens: the withdrawal rate can gradually increase.

This flexibility helps the portfolio last much longer compared to rigidly withdrawing a fixed percentage regardless of market conditions.

A sensible asset withdrawal order

Not all withdrawal sources are created equal. A commonly recommended order:

1. First, use stable income streams: social security pension, rental property income, dividends, interest from deposits — these are your retirement "salary."
2. Keep 1–2 years of expenses in safe channels (deposits) so you don't have to sell stocks right when the market drops.
3. Withdraw from your investment portfolio for the remaining shortfall, prioritizing rebalancing: sell portions that have appreciated significantly.

This approach helps you avoid "selling the harvest early" — selling growth assets at exactly the worst moment.

Three major risks to guard against

• Sequence of returns risk: a sharp market drop in the early years of retirement, when you're withdrawing money, can cause much more lasting damage than a similar drop late in life. This is why you should maintain a cash cushion and gradually reduce risk exposure as you approach retirement.
• Inflation risk: 20 triệu/month today won't be sufficient in the same way after 15 years. That's why a portion of assets should remain in growth channels to combat inflation, even after retirement.
• Longevity risk: many people live longer than they expect. Plans should account for scenarios of living to 90 or beyond, rather than just to average life expectancy.

Simple principles to remember

Retirement isn't "crossing the finish line and spending it all," but rather transitioning from accumulation to sustainable withdrawal. Keep the portfolio partially generating returns, withdraw flexibly based on market conditions, and always maintain a cash cushion — this trio helps your money accompany you to the end of the journey.

Want to estimate a sustainable withdrawal rate based on your asset size and retirement years? Use [Sirifin's compound interest calculator](/vi/calculators/compound-interest), or ask the [AI advisor](/vi/ai-advisor) to build a withdrawal plan that fits your situation.

Content is informational and educational in nature, not investment advice.