Safe Withdrawal Rate Myths: Debunking 3 Common 4% Rule Mistakes

Ready For Retirement

James Conole, CFP®

Investment Planning, Bonds, Education, Stocks, Cash, Business, Dividend Investing, Retirement Planning, Retirement, Investing, Tax Planning

5 • 706 Ratings

🗓️ 6 February 2024

⏱️ 20 minutes

🔗️ Recording | iTunes | RSS

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Summary

The 4% rule helps us understand how much we can safely take out of our portfolio each year without running out of money in retirement. Yet, as simple as the 4 percent rule seems, the practical implications are drastically misunderstood. I explore the three common mistakes people make when applying this rule and how to avoid them. Questions Answered: How do RMDs impact the 4 percent rule? Does the 4 percent rule account for changes in expenses and income sources? Timestamps: 0:00 - Question...

Transcript

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0:00.0	The 4% rule is one of those foundational aspects of retirement planning.
0:03.6	It really helps us begin to understand how much we can safely take out of our portfolio each year
0:08.1	without being excessively worried that we might run out of money in retirement, which, of course, is what most retirees want.
0:13.9	They want to know they're going to be okay and that they're probably not or certainly not going to run out of money.
0:18.3	The challenge is this.
0:19.7	As simple as the 4% rule seems on the
0:21.8	surface, the practical implications are drastically misunderstood. That's why in today's episode,
0:27.1	I'm going to share with you three common mistakes people make when applying the 4% rule,
0:30.5	and I'm going to share what you can do to avoid these mistakes and make sure that you're making
0:34.7	the most secure retirement possible.
0:41.2	This is another episode of Ready for Retirement.
0:44.7	I'm your host, James Cannell, and I'm here to teach you how to get the most of the life with your money.
0:45.9	And now, on to the episode.
0:49.6	And so what I'm going to do is this, is I'm going to walk through actual comments and
0:53.3	feedback I've received from all of you.
0:55.1	One thing I love about YouTube and I love about the podcast is as I have these episodes,
0:59.1	you all get to tune in and you send me feedback and you leave comments and you send
1:02.6	emails and I read all of those.
1:04.4	And a lot of those emails and comments are great.
1:06.4	It's other suggestions or it's questions about how do I apply this. And what I'm actually going to do
1:11.3	today is take three comments that I've received about the 4% rule that are misunderstood. So I get
1:17.2	where people are coming from, but I want to show the error in this thinking because this line of
	...

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