In February 1998, a group of researchers at Trinity College released a study of the safe withdrawal rate (SWR) for retirees. Instead of focusing on income generating investments like dividend paying stocks, real estate, and fixed income, the study considers how the total return of a portfolio of stocks and bonds can support a fixed withdrawal rate over a long period of time. If over that time period the portfolio balance doesn’t go to zero, it is considered safe. Using past histories of returns and inflation a 4% withdrawal rate is prudent with more stocks in the portfolio. An all stock portfolio can support a higher withdrawal rate, but with a lower probability of success.
Retirees don't need to consider only income producing assets for retirement. With an appropriate SWR, the capital gains of stocks and bonds yield income for retirement.
