![]() ![]() More recently, Bengen said that by adding small-cap stocks, you could increase your initial draw to 4.5 percent. This was based on Bengen’s analysis of historical investment returns all the way back to the Great Depression. Published by financial advisor William Bengen in 1994, this “rule” states that if you invest your retirement nest egg in a 50/50 mix of large-cap stocks and intermediate-term Treasury bonds, withdraw 4 percent of the total in your first year of retirement, and then each year thereafter increase the number of dollars you draw by the prior year’s inflation rate, your nest egg will last for at least 30 years. If you’ve been reading about retirement planning, I’m confident you’ve heard of the so-called 4-percent rule. The 4-Percent Rule and How People Try to Update It Find Retirement Financial Advisors on Wealthtender.The Guardrails Approach Implemented in Real Life.The “Guardrails Approach” – Adjustable Draws Allow Higher Spending with Lower Risk.Monte Carlo Simulations – Better than the 4-Percent Rule?.The 4-Percent Rule and How People Try to Update It.In this article for Wealthtender, I offer a deeper dive below into the guardrails approach, a less well-known, advanced strategy to provide you with the best retirement possible at the lowest risk possible. You can read the full article on Medium here: “ How to Have Your Best Retirement, Feel Confident, and Never Run out of Money.” I also briefly mentioned the best way to avoid running out of money in retirement. Some of these things are obvious (e.g., start saving as soon as possible, save as much as possible, etc.), and some are a bit less obvious (e.g., avoid lifestyle inflation, invest your retirement money in a prudently aggressive manner, maintain adequate insurance, etc.). Then, I provided a list of things you can do to reduce your risk of falling into abject poverty in retirement. ![]()
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