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WCI #325: What is the 4% Rule?
White Coat Investor Podcast
The 4% Rule for Retirement Withdrawal
The 4% rule comes from a study done at Trinity University in the 90s./nFinancial advisors used to recommend taking out 8% annually, but that can lead to running out of money due to sequence of returns risk./nThe study found that taking out about 4% a year, adjusted for inflation, is very likely to make your portfolio last at least 30 years./nReverse engineering the equation shows that you need about 25 times your annual expenses to be financially independent./nMany people use an adjust-as-you-go strategy instead of strictly following the 4% rule for retirement withdrawals.
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