The Terrible Truth About the 4% Rule (And A Better Strategy)
We discuss the flaws of the 4% rule for determining when you can retire, and go through a better strategy that could allow you to retire sooner and spend more in retirement.
Check out Trek Wealth Planning for a custom retirement plan: www.trekwealth.com/
Timestamps:
0:00 Introduction
0:14 Our Example Couple
0:22 What is the 4% Rule
0:44 4% Rule Example
1:23 Flaw #1: Constant Withdrawals
2:01 Why Constant Withdrawals Don’t Make Sense
2:53 Flaw #2: Sequence Risk
3:05 The Problem With Sequence Risk
3:31 An Example of Sequence Risk
4:33 Flaw #3: Based on Worst-Case Scenarios
5:02 When the 4% Rule is Too Conservative
5:22 Flaw #4: Differing Retirement Lengths
5:54 Summary of 4% Rule Flaws
6:16 Dynamic Retirement Income With Guardrails
6:59 Example of a Dynamic Income Strategy
7:46 How We Determine Withdrawals and Guardrails
8:23 How to Prioritize Saving To Prepare for Retirement
Disclaimer:
Trek Wealth Planning, LLC is an Investment Advisor registered with the States of Missouri and Kansas. This video is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy, or the completeness of, any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication's conclusions.
Пікірлер: 22
I lost over $70k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Patricia Annie Brooks
@Jessecote875
9 күн бұрын
Wow. I'm a bit perplexed seeing her been mentioned here also Didn’t know she has been good to so many people too this is wonderful, i'm in my fifth trade with her and it has been super.
@Nguyenvictory83
9 күн бұрын
You trade with Annie Brooks too? Wow that woman has been a blessing to me and my family.
@Charlottehornets4
9 күн бұрын
YES!!! That's exactly her name (Annie Brooks) so many people have recommended highly about her and am just starting with her from Brisbane Australia🇦🇺
@Josephbasta827
9 күн бұрын
I'm new at this, please how can I reach her?
@Rodriguezpaul-9
9 күн бұрын
Her good reputation already speaks for her .I’m also one of the beneficiary of Annie Brooks. So happy I gave it a trial after being skeptic of the process.
The 4% rule is not a rule It was a study on the safest highest withdrawal rate from a portfolio over 30 years. That information wasn't available before the study.
The historical calculations in the initial Bill Bengen Trinity study showed success with stock bond ratios of at least 50-50. So extra bonds are definitely risky, in the sense that they are less likely to keep up with inflation.
@rodrigok1220
14 күн бұрын
I was surprised he said 60% bonds. I’ve always been told it’s the reverse… 60 stocks, 40 bonds.
@johngill2853
14 күн бұрын
Bengen and Trinity study are two different studies The Trinity study showed more than 50/50
If you are going to critique the 4% rule you should follow the rules.. He had 50% in the S&P500 and 50% in intermediate Treasuries, rebalancing annually. His research found that most portfolios lasted 50 years and ALL lasted 35 years! Using an unbalanced portfolio to prove it won't work is disingenuous!
If you have a million, it is better to live out of dividends, then reinvest whatever you didnt use for the year and your account will be growing
Not sure why you used such an old range of years 1966 to 2000? Also, with these guard rails you are just requiring people to have an advisor forever right? Seems highly complicated...
@eldersprig
2 күн бұрын
cherry picking. (gee I wonder if he's selling something?)
Everyone complains about the divide between rich and poor, and continues to do poor mans thinking. If your portfolio goes towards zero as you get older you have failed, people need to think about their kids wealth building too. Passing on as much as they can so the next generation gets a jump up. Having nothing to pass on hurts your bloodline far more.
@dlg5485
12 күн бұрын
You have a high opinion of yourself don't you?
@heidikamrath1951
11 күн бұрын
Dude, no. Read “Die with Zero.” The objective is to spend/do appropriate things at appropriate times. Spend on travel when you can actually still enjoy it. Help your kids when they need it (home purchase, for example) instead of waiting to leave them a legacy when they may already be seniors themselves. In this way of thinking, you are still helping your “bloodline,” but you are doing at appropriate times when it is more appreciated. Additionally, you are still alive to see them enjoy the money.