Outliving oneâ€™s assets is a major concern for todayâ€™s retirees. One common approach to address this concern has been the â€ś4% rule,â€ť which is a generally accepted rule of thumb in financial planning for retirement income. It says to withdraw no more than 4% of an asset in retirement annually, and then increase the withdrawn amount by 3% each year to help offset the effects of inflation.Â Many believe the 4% rule provides a strong likelihood for retirement assets to last 30 or more years.
One problem with the 4% rule is that it does NOT GUARANTEE you wonâ€™t run out of money. In fact, with todayâ€™s historic market volatility and longer life expectancies, itâ€™s predicted that up to 18 out of 100 people WILL RUN OUT OF MONEY in retirement using the 4% rule.
What if there was a different strategy that could provide the same amount of retirement income as the 4% rule and might even require fewer assets to do so? Additionally, this strategy would protect your income from market loss and GUARANTEE that income would last throughout your lifetime.
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