The Most Dangerous Misconceptions about the 4% Safe Withdrawal Rate
The Money with Katie Show
00:00
Sequence of Returns Risk Matters
Some advisers told their clients they could take six to seven %, since that was the average stock market return at the time. Sequence of returns risk basically just means that if you have too many negative years in a row, it can be disastrous. Even though over a wide time horizon you might average seven % per year when adjusted for inflation, if you have three years in a Row where your real rate return is a lot lower than seven %, you're drawing down on assets when they're at a loss.
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