Retirement: Is the 4% rule still relevant?

For the last 20 years there has been a steadily consistent rule of thumb by America’s financial planners when it comes to retirement — the 4% rule.

And what exactly is the 4% rule?

In short, it’s a guideline that helps retirees determine how much money they should take from their nest egg each year. The goal is to help make sure the money lasts.

In other words, if you adhere to the rule and have a nest egg of $500,000, you should limit your withdrawals for living expenses to 4%, or $20,000 a year.

So, the big question is, after 20 years, is the rule still relevant? Most planners interviewed say yes — but only as a rule of thumb, and certainly not for everyone.

 

Read more from USA Today here

Advertisements

One response to “Retirement: Is the 4% rule still relevant?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s