Retirees: How to Make the 4% Rule Last in Retirement
Given the tumultuous start to the year for the S&P 500, it's no wonder retirees and pre-retirees are nervous about the prospect of entering a prolonged bear market. Combine poor stock performance with a low-yielding bond environment and the possibility that Social Security reserves may deplete, and there is fair reason to be concerned. However, as we'll explore below, there are several ways to make retirement withdrawals even more sustainable -- and to ensure you're covered in a variety of future circumstances.
The 4% rule as it relates to your personal savings is meant to act as a general rule of thumb. Taking your retirement savings as a whole, you can withdraw 4% annually (adjusted for inflation) and face only a minimal probability of running out of money over the course of a 30-year retirement.
The 4% rule has also come under fire as of late, as the concept was developed when bonds were yielding far more than they do today, and during a time when the 60% stock/40% bond portfolio was seen as the norm for aspiring retirees.
Source Fool.com
