The four (or any other percent) rule is a static approach that also ignores many things. First, it does not consider the changes in consumption pattern over the two / three decades of retired life. Moreover, it also fails to account for unfortunate outflows such as LTC and does not easily accommodate a desire to leave a legacy. Finally, it is silent on the tax impacts of alternate accounts for the withdrawal. Thus, I agree with the comments that the 4% provides a reasonable starting point that needs to be adjusted to take into account other economically and psychologically significant factors.
Comments
The four (or any other percent) rule is a static approach that also ignores many things. First, it does not consider the changes in consumption pattern over the two / three decades of retired life. Moreover, it also fails to account for unfortunate outflows such as LTC and does not easily accommodate a desire to leave a legacy. Finally, it is silent on the tax impacts of alternate accounts for the withdrawal. Thus, I agree with the comments that the 4% provides a reasonable starting point that needs to be adjusted to take into account other economically and psychologically significant factors.
Post: Tweaking the 4% Rule
Link to comment from April 30, 2025