Author Topic: Article - "Why the 4% Rule No Longer Works for Retirees"  (Read 3058 times)

bikebum

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Article - "Why the 4% Rule No Longer Works for Retirees"
« on: March 09, 2013, 03:19:09 PM »
http://www.investopedia.com/articles/personal-finance/030613/why-4-rule-no-longer-works-retirees.asp#axzz2MzgmTzZD

I don't have an opinion on this. Just thought people may find it interesting.

Prob8

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #1 on: March 09, 2013, 08:11:05 PM »
Thanks, Josh.  The article appears to indicate problems for portfolios heavily invested in bonds.  Continuing the theme of interesting reading, here is a link to the Trinity Study:  http://www.fpanet.org/journal/CurrentIssue/TableofContents/PortfolioSuccessRates/

I'm not tech savvy enough to be able to just let you click on the link.  If it doesn't work, Jim Collins cites to it in his December 7, 2012 blog post - Stocks Part XIII.  Happy reading.

Chris Pascale

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #2 on: February 28, 2024, 08:56:12 AM »
11 years later, and 4% still seems ok.

I guess saying that the 4% rule won't work "anymore" has helped advisors keep people from managing their own accounts. After all, the ad keeps playing if customers keep coming - an example is a RE Investment Co. that is 'only looking for a few select people looking to make passive income.' That ad played for years on a radio station near me.

Prudential article says "it may not stand up today," but has the solution of "making dynamic withdrawals," which sounds to me like forgetting you're not holding inside info.

https://www.prudential.com/financial-education/4-percent-rule-retirement
« Last Edit: February 28, 2024, 08:58:35 AM by Chris Pascale »

Stimpy

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #3 on: February 28, 2024, 01:12:06 PM »
Wow blast from the past but.....  Since I still keep hearing how the 4% rule won't work anymore....  It's still relevant.   Guess as long as it keeps the cash flowing in to advisers, it really doesn't work.... Fear is an excellent industry to be in after all!

Psychstache

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #4 on: February 28, 2024, 03:10:54 PM »
Here's a portfolio visualizer applying the "4% rule" from March 2013-today. Portfolio #1 is 100% stocks, #2 is 90/10 stocks/bonds, #3 is 75/25.

« Last Edit: February 29, 2024, 11:21:30 AM by Psychstache »

Heckler

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #5 on: February 28, 2024, 08:43:13 PM »
https://www.bogleheads.org/wiki/Variable_percentage_withdrawal
https://www.finiki.org/wiki/Variable_percentage_withdrawal


Bogleheads and Canadian sister site Finiki say 4% is too low (depending on your age), but also that it relies on annual returns, diversification, and not a constant 4% of the initial balance.  It also doesn't rely on the last ten years' recency bias.

davisgang90

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #6 on: February 29, 2024, 04:06:03 AM »
"Why Clickbait titles on articles don't work anymore"

mistymoney

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #7 on: February 29, 2024, 08:54:40 AM »
http://www.investopedia.com/articles/personal-finance/030613/why-4-rule-no-longer-works-retirees.asp#axzz2MzgmTzZD

I don't have an opinion on this. Just thought people may find it interesting.

weird - I'm not finding the same article? Can't find a mention of 4% in the link, even though it is in the link.

lol, because the OP is 11 years ago!
« Last Edit: February 29, 2024, 03:41:57 PM by mistymoney »

mistymoney

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #8 on: February 29, 2024, 03:40:50 PM »
https://www.bogleheads.org/wiki/Variable_percentage_withdrawal
https://www.finiki.org/wiki/Variable_percentage_withdrawal


Bogleheads and Canadian sister site Finiki say 4% is too low (depending on your age), but also that it relies on annual returns, diversification, and not a constant 4% of the initial balance.  It also doesn't rely on the last ten years' recency bias.

that's what I like to hear, hahahaha!

MustacheAndaHalf

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Re: Article - "Why the 4% Rule No Longer Works for Retirees"
« Reply #9 on: March 01, 2024, 11:39:22 AM »
Here's a portfolio visualizer applying the "4% rule" from March 2013-today. Portfolio #1 is 100% stocks, #2 is 90/10 stocks/bonds, #3 is 75/25.
Yes, investing 100% stocks during the longest bull market in history was a good choice.  Most people won't be that lucky.  The average investor might follow a path closer to a Monte Carlo simulation, which randomizes performance and runs repeated simulations.