The 4% rule suggests retirees can withdraw 4% of their investment portfolio annually to sustain their living expenses. However, its practical application is complicated by factors such as market volatility, low interest rates, and rising living costs. To illustrate, if one needs $120,000 a year, they would need a $3 million portfolio. Nevertheless, market downturns could impact withdrawal amounts and reduce portfolio longevity. Additionally, many retirees may find their living expenses increase over time, further complicating the feasibility of relying on the 4% rule alone.
The 4% rule, while popular for managing retirement withdrawals, faces challenges from market volatility, low interest rates, and rising living expenses that retirees must consider.
Retirees aiming to withdraw 4% of their portfolio may face risks from prolonged market downturns, necessitating adjustments in capital allocation to manage those risks.
Collection
[
|
...
]