The Briefing Room

General Category => Economy/Business => Topic started by: catfish1957 on October 22, 2020, 06:29:03 PM

Title: The inventor of the ‘4% rule’ just changed it
Post by: catfish1957 on October 22, 2020, 06:29:03 PM
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t’s been more than 25 years since Bill Bengen, a financial adviser in southern California, created the so-called “4% rule.”

That’s the principle that if you want to make sure your retirement savings last at least as long as you do, you should budget to spend no more than 4% of the balance in the first year—and then just adjust the amount each year in line with inflation.

Bengen called his rule “Safemax”—the maximum amount you could withdraw each year and still say “safe.”


We all have our own system, mine since starting retirement 6 years ago, has been pretty simple.  I basically leave principle in place, and draw all non-annuity interest and dividends out as distributions.  Of course that is running more in line with 3-4% of late  As I approach 70, I might start indexing it up, to minimize the dreaded RMD pain.