The 4% rule comes from a study done at Trinity University in the 90s.
Financial advisors used to recommend taking out 8% annually, but that can lead to running out of money due to sequence of returns risk.
The study found that taking out about 4% a year, adjusted for inflation, is very likely to make your portfolio last at least 30 years.
Reverse engineering the equation shows that you need about 25 times your annual expenses to be financially independent.
Many people use an adjust-as-you-go strategy instead of strictly following the 4% rule for retirement withdrawals.
Today we are answering your questions off of the speak pipe. We spend some time learning about the 4% rule and what it is and how it works. We answer a few of your questions about the 4% rule, tackle another pay down debt or invest question, another about tax loss harvesting, and one about stock yield enhancement programs and more!
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