Flight #16: The 4% Rule

In this podcast, we are talking about a commonly used rule-of-thumb for taking retirement income distributions. The 4% rule is meant to help you easily determine how much you can withdrawal from your retirement accounts each year, without running out of money in retirement.

The 4% rule goes like this:

1. The year you retire, add up all of your retirement accounts, and withdrawal 4% of the total.
2. Each subsequent year, take out only the 4% (of the total balance at time of retirement) + adjustments for inflation.
3. At this withdrawal rate, your money should last 30 years.

So, should you keep it simple and use the 4% rule? We don’t think so!

In fact, this podcast is dedicated to help you understand why the “4% Rule” may not be the best solution for taking retirement income distributions.