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Bogleheads® Live
Bill Bengen: 4% Rule of Thumb
Dec 26, 2022
Bill Bengen, a retired financial advisor and the mastermind behind the 4% rule for retirement withdrawals, shares his invaluable insights on sustainable financial strategies. He reassesses the 4% rule amid current market fluctuations, discussing portfolio adjustments necessary for uncertain economic times. Bengen highlights the impacts of high stock valuations and inflation on retirees and the importance of flexible strategies. Listeners will learn how age and spending patterns influence withdrawal rates, along with the potential pitfalls of fixed withdrawal approaches.
31:25
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Quick takeaways
- Bill Bengen recommends adjusting the 4% withdrawal rule to approximately 4.5% to 4.7% to navigate current high inflation and low returns.
- Bengen emphasizes the critical role of asset allocation, advocating for a 55% to 60% stock mix to enhance portfolio resilience against volatility.
Deep dives
The 4% Withdrawal Rule and Inflation
The 4% withdrawal rule is widely recognized as a guideline for retirees, originally based on historical data. However, the current economic climate, characterized by high inflation and low stock market returns, suggests a need for caution. Bill Bengen, the rule's creator, has recommended an updated withdrawal rate of approximately 4.5% to 4.7%, urging investors to adopt a more conservative approach during this uncertain period. This adjustment stems from the realization that the circumstances could mirror previous worst-case scenarios, and retirees should prepare for possible changes in their financial landscape.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode