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What is the 4 percent rule and is it still valid?
Most of us have heard of the 4 percent rule for retirement withdrawals, but do we understand it? In 1994, financial advisor William Bengen published a paper stating that retirees could safely spend about 4 percent of their retirement savings in the first year of retirement, and in subsequent years they could adjust the amount by the rate of inflation. He found by using this formula most portfolios would last at least 30 years. But is the 4 percent rule still valid? The attached forbes.com article reviews how the 4 percent rule works and whether or not it is a reliable approach in today’s uncertain economic times. Read the article here…
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