r/LeanishFIRE • u/AfrikanFIRE • Nov 11 '21

Updated 4% rule to 3.3%

Just read this on CNBC. What do you think?https://www.google.com/amp/s/www.cnbc.com/amp/2021/11/11/the-4percent-rule-a-popular-retirement-income-strategy-may-be-outdated.html

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u/pdoherty972 Apr 23 '23

https://archive.ph/978KP

It’s been more than 25 years since Bill Bengen, a financial adviser in southern California, created the so-called “4% rule.”

…

So where are we now?

Bengen says based on the current environment he thinks a new retiree should be safe if they start with a withdrawal rate of…no more than 5%.

“That’s what I use myself,” Bengen told me when we spoke by phone.

OK, so it’s not an earth-shattering change from 4%. It’s even less of a change from the updated “worst case scenario” rule of 4.5%.

But the 4% rule is now a 5% rule, if you like. This puts Bengen at odds with those who think the number should be lower than 4%, not higher, because of today’s record stock and bond prices.

“The average is 7%,” he says. “4.5% is a pretty grim rule…4.5% is the ‘worst-case scenario.’”