Retirement Starts Today Radio

Originally aired June 2024: The 4% rule is the “golden rule” of retirement planning. Everyone is familiar with it and it’s easy to work out for some quick, back-of-the-napkin math. Since it is so easy to calculate and implement, many use it as their retirement withdrawal rule. However, this approach may be overly conservative. While using a significantly higher withdrawal rate may go too far, the 4% rule may be too cautious. Listen in to hear the limitations of sticking with this overly simplistic rule of thumb. Outline of This Episode (2:25) Is the 4% rule too safe? (11:16) Does it make sense to spend more in the early years while awaiting full retirement age? The pitfalls of the 4% rule Oftentimes, people fail to take into account other income sources when calculating the 4% rule. Social Security and pensions may provide a base income floor which means you could use a higher withdrawal rate from your portfolio. My biggest problem with the rigid 4% rule is that it isn’t flexible enough. The 4% rule doesn’t