You probably know about the “4% rule.”
Studies show that retirees should be able to withdraw an inflation-adjusted 4% per year (based on their account value during their first retirement year).
But recently, I’ve warmed to something else. With this new method, a retiree’s money would have lasted more than 40 years…. even if they began on the eve of history’s biggest market crash (1928).
You might think I’m talking about withdrawing just 3% per year. But no… this goes the other way.
With a couple of simple rules (that make a lot of sense) retirees should be able to withdraw an inflation-adjusted 5% per year.
That’s a 20% income boost, compared to the 4% rule.
Image by Pixabay