4% Rule
Featured Video Play Icon

Finance Focus Video: The 4% Rule

This video goes out to the pre-retirees – today’s topic is the 4% rule for your retirement assets. What is the 4% rule for distributions from retirement assets? The rule states that once you enter retirement, you can safely withdraw 4% from your retirement accounts and still maintain those accounts throughout a 30-year retirement. From a $1m account, you can safety withdraw $40k and still likely leave a meaningful balance for your heirs.

How was it that 4% is determined the right number? Hundreds of monte carlo simulations of investment scenarios using multiple investment returns assumptions. Includes Great recession, 9/11, 1987 Crash, etc.
There is an industry-wide adoption that 4% is a safe number. In fact, more than 2/3s of the time, the retiree is left with 2x the amount of their original investment. Only 10% of the time the retiree had less than their original principal, and we’re not aware of a circumstance where there was no principal left. It works.

But what can go wrong? poorly constructed portfolio
A heavy bond allocation could be an issue. .75% is the 10 year Treasury yield.
Of course this is an important topic for you and it requires more than a one minute video and a website. For more financial insight, go to the link on the bottom of your screen, enter your info and let’s stay in touch. Thanks for watching