Gabe touches on SRP’s stance on the validity of the 4% rule.
How Safe is the 4% Withdrawal Rule in Retirement?
Now this question depends on the individual. But, it is a great rule of thumb for retirees who have a balanced portfolio and are planning a 30-year retirement. At SRP, we have never ran into a scenario where with a 60/40 portfolio on a 30-year plan, the 4% rule hasn’t met the mark.
However, a situation where 4% withdrawal rate may not be ideal is for someone who isn’t likely to live another 30 years. 4% withdrawal is actually a pretty low rate in this case. Opposite of that, do you have the real inflation on your portfolio or is it simple inflation? These ideas really matter in guiding how we run a retirement portfolio and determine if the 4% rule correct.
