Changed: The Famous “4% Rule” for Retirement Withdrawals
For decades, financial planners have been guided by the so-called “4% Rule” which suggests that you can avoid running out of money in retirement by limiting your annual nest egg withdrawals to 4% of your savings. This rule, a 1994 strategy developed by financial guru William Bengen, has been a stalwart “tried and true” guide offered widely to those entering their golden years. But now, the author of this famous rule is saying that it is too conservative for today’s retirees, because it assumed the poor market returns and high inflation rates common when the rule was developed. New retirees, Mr. Bengen now says, can safely withdraw about 5% from their retirement savings without fear of running out of money in retirement. All of this is explained in this Yahoo! Finance article by Shane Murphy. Click here to read more.