DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing Rule of 4% - Am I on Track for Retirement?
Dec 12, 2025
Quint and Allie delve into the 4% rule for retirement savings and its relevance. They tackle the differences between annual and continuous compounding, stressing the importance of simplicity in calculations. Monte Carlo simulations are discussed, highlighting conservative withdrawal strategies. They also explore the risks associated with inflation and portfolio assumptions. Furthermore, the hosts emphasize when to seek professional financial advice and speculate on the future role of AI in retirement planning.
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College Visits Can Derail Household Plans
- Quint recounts his son returning from college and late-night outings disrupting household rules.
- He uses the story to illustrate how real-life events can upend tidy retirement or budgeting plans.
Use Annualized Returns For Projections
- Use an annualized rate for long-term compounding instead of obsessing over continuous vs. annual compounding.
- Keep the model simple: apply an annualized return to your contributions and timeline and avoid overcomplicating the math.
Why The 4% Rule Generally Holds
- The 4% rule works because long-term portfolio volatility averages out, not because returns are linear each year.
- Monte Carlo simulations reveal how sequence risk and variability affect the probability of success over decades.