Brett Arends’s ROI: Goodbye, 4% rule. Hello, 6% rule!

by | Nov 16, 2023 | Stock Market

For decades, one of the cornerstones of retirement planning advice has been the so-called 4% rule.  Financial advisers said that if you want to be sure of making your retirement savings last for the rest of your life, then in the first year of retirement you should withdraw no more than 4% of your portfolio’s value. Then, in each subsequent year, you should raise the amount you withdraw by no more than the rate of inflation.

This was based on the assumption you had invested the portfolio in a conservative mixture of stocks, bonds and cash. Good advice? Sure. Probably. Once.  But not now. If I were turning 65 and retiring tomorrow, I know for certain that I could beat that figure by around 50%. I could take out nearly 6% of my portfolio in the first year, not just 4%. And hike it each year, to help cover the costs of inflation. And do so without any serious risks or challenges. And I also know I would be guaranteed — as close as anything in this business — that my money would last until I died. Not just for 30 years, but even if I made it to 100 or 110. How’s that for a dramatic improvement in my ma …

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