BiggerPockets Money Podcast
The 4% “Rule” is Wrong for FIRE—Here’s a Better Alternative
May 6, 2025
Tyler Gardner, a former portfolio manager and financial advisor, shares valuable insights on retirement planning. He challenges the 4% rule, arguing its rigid nature might jeopardize financial security for early retirees. Gardner emphasizes the need for flexibility in withdrawal strategies, advocates for a more robust FIRE portfolio, and highlights the importance of having a financial cushion. He also discusses the psychological complexities of retiring early and suggests alternative investment strategies, including a focus on stocks and real estate.
01:11:18
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Quick takeaways
- The rigid 4% rule for retirement withdrawals is criticized for creating unrealistic expectations without accounting for market fluctuations or personal situations.
- Tyler Gardner advocates for retirees to maintain two years of cash reserves to manage market downturns and mitigate the sequence of returns risk.
Deep dives
The Limitations of the 4% Rule
The 4% rule, often viewed as a standard for retirement withdrawal rates, is criticized for being too rigid. It creates unrealistic expectations by suggesting retirees can withdraw a fixed percentage annually without considering market fluctuations or personal financial situations. Tyler Gardner emphasizes the need for a dynamic approach, highlighting that retirees' financial needs will vary each year based on market performance and personal circumstances. He suggests rethinking the 4% rule as a guideline rather than an absolute rule, allowing for adjustments based on market conditions and personal retirement goals.
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