Is the 4% Rule in Retirement Outdated? Here's What to Do Instead
More on Retirement from Marc When it comes to withdrawing from your nest egg, it’s important to think carefully about what makes sense for your special portfolio and goals — and not just follow general rules. The 4% withdrawal rule is one of the most well-known retirement strategies for tapping into your nest egg without running out of cash, but many experts say it is outdated. It entails withdrawing 4% from your retirement savings during your first year of retirement, then adjusting that amount for inflation each year going forward. Morningstar recently said a 3.9% withdrawal rate is the "highest safe starting withdrawal rate for retirees seeking a consistent level of inflation-adjusted spending from year to year, assuming a 90% probability of having funds remaining at the end of an assumed 30-year retirement period." Early losses can limit a portfolio's ability to recover from market…