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Does ‘4 Percent’ Still Work for Retirement? (Chicago Tribune)

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It’s an age-old question: What percentage of their savings can retirees comfortably spend each year? Since the 1990s, the safe answer has been 4 percent in the first year of retirement, adjusted slightly for inflation in each of the following years. 

After two horrendous bear markets in the last decade, however, financial planners have dropped the number to 3.5 percent, which should safely carry retirees through a 30-year retirement. (The traditional 4 percent spending rule leaves an 8 percent chance that clients will outlive their savings.)

With life expectancies increasing, it makes sense that retirees would want to tread with more caution. Just as important, leaving more money in savings or investments gives your stocks a greater chance to make gains again.

Read the story.


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