InvestmentNews: An Update on the 4% rule
Updated: Dec 28, 2019
Here's the article link:
Here's a particular quote from this article:
"My team's work recreated the study with retirement withdrawals beginning every year from 1929 to 2009 — 82 separate retirement starting points. We used actual market data until 2017 and ran multiple simulations with historically conservative average return estimates thereafter: 5% for stocks, 2% for bonds and 3% for inflation."
"What I found was that 70% of the time (58 of the 82 scenarios), retirement funds lasted 50 years or more. The remaining 30% of the time, the money "ran out," with the worst-case scenario in our study being 29 years."
Here's the problem: Past Performance Does Not Guarantee Future Results.
Baby-boomer retirement: The United States is about to experience something that has NEVER been tested before: The retirement of all these BABY-BOOMERS! That's the demographic data. This means LESS spending into the economy.
Unprecedented Government Debt: I've already done other posts regarding the national debt and the likelihood of increasing taxes - which would result in increasing withdrawals from retirement savings plans.
Will taxes go up? I'm certain of it - but it won't be during the Trump presidency - whether it ends in 2020 or 2024. By how much? We don't know. Right now, the economy is doing better... at the cost of an increasing national debt.
With all this uncertainty... wouldn't you rather have MORE certainty in your retirement than LESS?
You don't have to remove ALL your money from the market. In fact, there's a great planning phrase that I hope will catch on: "Buy income and invest the difference." In short, however much of your portfolio you need for income, use it for guaranteed income. Anything remaining, keep it in the market, if that's what you want to do.
David H. Kinder | Lifetime Tax & Wealth Educator
Dynamic Advanced Insurance, Financial, and Retirement Strategies