iShares Barclays TIPS Bond Fund (ETF) (TIP): The Right Withdrawal Rate for Your Retirement

For those already in retirement, using more high-risk assets is one way to improve yield. PIMCO Total Return Bond uses a variety of different types of bonds to try to boost returns, even as its distribution yield has been similar to its passive-ETF counterparts lately. High-yield junk bonds will give you better yields but with greater overall risks of default. And of course, the race into dividend stocks that has led to floods of inflows into Yield and other dividend ETFs introduces an entirely new level of risk, as the security of return of principal that bonds offer totally disappears with a stock investment.

Arguably the best strategy to follow with your retirement withdrawals is to find ways to trim the automatic upward adjustments that the 4% rule calls for. If you can handle spending increases at less than the rate of inflation, then you’ll be able to withstand greater financial shocks in the markets without increasing your risk of running out of money. In the end, being able to be prudent with your budget is your best defense against financial uncertainty.

Tune in every Monday and Wednesday for Dan’s columns on retirement, investing, and personal finance. You can follow him on Twitter @DanCaplinger.

The article The Right Withdrawal Rate for Your Retirement originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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