Determining the rate at which to draw down your wealth can be among the more agonizing decisions facing anyone in or entering retirement.

Even if in the wake of the poor financial markets of the past 18 months your nest egg seems adequate, you face one of the more complicated times of your life as far as financial planning is concerned. You have before you a delicate balancing act.

You may have several goals.

Perhaps you would like to leave your heirs a respectable inheritance, you have charitable commitments or ambitions and, of course, you’ll need an income to pay necessary expenses and support the kind of retirement lifestyle you planned.

Part of this process involves realistically assessing your health care requirements and longevity risk, because these two retirement wild cards can be determining factors as you decide how to draw on your assets.

If all is well and you are planning for a long retirement—and 25 to 30 years for a 65-year-old retiree is not an unreasonable assumption—you’ll need to withdraw assets at a rate likely to facilitate that.

Hard decisions

To be relatively sure of funding a lengthy retirement, your initial annual withdrawal rate should probably be no more than 4 percent or 5 percent of your assets, each year increasing the dollar amount to account for inflation—keeping in mind that health care costs may climb faster than the general inflation rate.

Even ideally diversified portfolios with model asset allocations are unlikely to last if you set a higher withdrawal rate.

What if the “safe” percentage won’t yield what you had expected?

If you’re still in your pre-retirement years, max out your retirement savings and other investment opportunities.

If you are about to retire or are already retired, ensure your investments and your withdrawal rate are positioned to give you the best chance of fully funding your retirement at a level likely to give you the kind of enjoyment you had always imagined.

If you have questions about the best way to reach your retirement goals, please call me.