Is the 4% Rule in Retirement Appropriate for Everyone?
A common retirement rule of thumb that we have written about in our blog in the past is the 4% rule for withdrawals from savings in retirement. A recent Market Watch article discusses the potential that this rule is inadequate for many investors. For starters, the 4% rule is merely a rule of thumb and not the final word on the topic - many variables come into play once retirement begins and an individual's income needs could fluctuate significantly over the course of retirement. For example, unexpected illnesses or expenses, in addition to market fluctuations, could impact the amount of money that a retiree needs to draw from retirement savings. Additionally, the life expectancy of a retiree changes as the person ages. Therefore, a 4% withdrawal rate that may have been sufficient for a new retiree at the age of 65 may need to be re-considered as the retiree ages to account for a longer life expectancy than originally anticipated.
At RDM Capital, we work with clients to devise a customized retirement withdrawal strategy that builds off generally accepted rules of thumb to fit the unique financial needs and circumstances of each client. Contact us if we can help you plan your retirement income withdrawals and craft an investment portfolio that suits those needs.