Does the 4% Rule Matter?
A new report claims that the so-called 4% rule of retirement spending needs adjustment – the media all seems atwitter (literally). But does it (really) matter?
The 59-page report by some research folks at Morningstar opined that those wanting a high level of assurance that their retirement nest egg will last should spend no more than 3.3% of their savings in the first year of a three-decade retirement, and adjust for inflation after that. And as you might expect – considering not only that the report calls into question a long-standing “rule” of retirement planning – and particularly that it does so in the context of reducing expectations for retirement spending – it garnered a lot of headlines, including the Wall Street Journal (and even this publication).
The 59-page report by some research folks at Morningstar opined that those wanting a high level of assurance that their retirement nest egg will last should spend no more than 3.3% of their savings in the first year of a three-decade retirement, and adjust for inflation after that. And as you might expect – considering not only that the report calls into question a long-standing “rule” of retirement planning – and particularly that it does so in the context of reducing expectations for retirement spending – it garnered a lot of headlines, including the Wall Street Journal (and even this publication).