Understanding The 4 Percent Rule

Are you worried about withdrawing too much money from your accounts in retirement? Nathan explains the 4 Percent Rule and why it's been a proven strategy for determining retirement distributions. But first, join us as we unpack the latest headlines in the news.
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Today’s Question:

Are you worried about withdrawing too much money from your accounts in retirement? Nathan explains the 4 Percent Rule and why it’s been a proven strategy for determining retirement distributions. But first, join us as we unpack the latest headlines in the news.

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In The News:

2:22 Trade War With China

  • Nathan says ultimately it’s good; what they’re trying to do is get free trade.
  • Similarly to when we had the trade wars in the ‘70s, it will probably be a while before we get something settled.
  • If you’re allocated right, you should be expecting this type of volatility.

The Confidence Corner:

6:47 The 4 Percent Rule

  • When you retire, if you’ve got a nest egg saved, this rule says you’re probably safe to withdraw 4 percent from it every year.
  • In the 1990s, Bill Bengen wrote an article based on studies of distribution rates that worked.
  • Even now, the 4 percent rule works if you have a diversified account.
  • If you’re in large cap stocks then you didn’t make 4 percent, so diversification is important to have in retirement as you’re taking distributions.
  • Looking over the past 40 years, 4 percent has worked. It even worked during the Great Depression.
  • The report was run based on numbers as far back as 1926.

A Point Of Wisdom:

4 percent is the rule of thumb because when you look historically, the four percent rule worked in every scenario. 4 percent works even now. - Nathan O'Bryant
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Additional Resources:

Bill Bengen Article

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YOUR HOST

Nathan O’ Bryant is the founder of O’Bryant & Associates, Inc., a Registered Investment Advisory firm in the state of TN. He’s been helping people plan for retirement and their financial futures for more than 15 years.

The weekly podcast features discussion and excellent guidance on the important financial planning questions we all have. Whether it’s tax planning, retirement income, social security or the stock market, you’ll find that no topics are off limit on this show.

Facebook Linkedin Twitter Youtube

YOUR HOST

Nathan O’ Bryant is the founder of O’Bryant & Associates, Inc., a Registered Investment Advisory firm in the state of TN. He’s been helping people plan for retirement and their financial futures for more than 15 years.

The weekly podcast features discussion and excellent guidance on the important financial planning questions we all have. Whether it’s tax planning, retirement income, social security or the stock market, you’ll find that no topics are off limit on this show.

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This content is provided for informational purposes only. It is not intended to provide tax or legal advice. O’Bryant & Associates, Inc., is a registered investment advisory firm in Tennessee.

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