Is the 4% Rule Really Best For Your Retirement Income Plan?


Is the 4% Rule Really Best For Your Retirement Income Plan?

Outliving a retirement nest egg is retirees’ #1 fear.

That’s understandable.

You have saved your entire working life to build it, and you know that the idea of going back to work in your golden years could be undesirable, or even impossible.


That makes withdrawal planning a critical aspect of your retirement portfolio.

Perhaps the most well-known withdrawal strategy is the 4% rule.


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In this article, we will look at how the 4% rule works and provide some guidance for you to consider if it is the best strategy to optimize your retirement savings.


We want to help make sure you enjoy retirement without outliving your money.


What's The 4% Rule?


An inherent problem in retirement planning is that you don’t know exactly how long you will live after you retire.


If you did, planning your retirement spending would be significantly easier because you’d know how many years your money needed to last.


But since that isn’t the case, we must incorporate that uncertainty into our withdrawal plans.


The 4% rule is one way of approaching this variable. It is based on a comprehensive retirement withdrawal study conducted by William Bengen in 1994.

Bengen wanted to know was how much a retiree could plan to withdraw each year, as a percentage of their portfolio, without running out of money (regardless