3373: [Part 1] Rethinking the 4 Percent Safe Withdrawal Rule by Fritz Gilbert of The Retirement Manifesto

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Episode 3373:

Fritz Gilbert challenges the conventional 4% safe withdrawal rule, arguing that its simplicity may be dangerously outdated given today’s market conditions. He outlines key concerns about relying on historical data, inflated equity valuations, and rising interest rates, and hints at three practical adjustments he personally uses to reduce risk in retirement spending.

Read along with the original article(s) here: https://www.theretirementmanifesto.com/rethinking-the-4-safe-withdrawal-rule/

Quotes to ponder:

"Bond prices are inversely related to interest rates, so as rates go up, bond prices go down."

"Assuming a minimum requirement of 30 years of portfolio longevity, a first-year withdrawal of 4 percent, followed by inflation-adjusted withdrawals in subsequent years, should be safe."

"If you’re holding 60% stocks and 40% bonds, it’s possible that you could see decreases in both asset classes."

Episode references:

GMO Forecast via Wealth of Common Sense: https://awealthofcommonsense.com/2021/10/the-worst-stock-and-bond-returns-ever/

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