Retirement income: How to improve on the 4% rule

June 17, 2014 by Warren S. Hersch

As a guide to retirement income planning, the 4 percent rule clearly needs to be revisited, as this article suggests. Based on a 75-year analysis of stock market returns and retirement scenarios, the rule surmises that retirees who withdraw 4.2 percent of their investment portfolio in the initial year of retirement, then adjust withdrawals in subsequent years to account for changes in the inflation rate, can reasonably expect to have enough money to carry them through retirement. But given current market conditions, including record-low interest rates, a two percent withdrawal rate, as many advisors now believe, is the more realistic benchmark to live by. – Warren S. Hersch.

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Originally Posted at LifeHealthPro on June 17, 2014 by Warren S. Hersch.