Also, Americans are living longer these days than they were years ago. If you’re retiring on the early side, you may need your nest egg to last more than three decades. A good way to stretch that money is to stick to a lower withdrawal rate. First, when the 4% rule was introduced, bonds were offering much higher yields than they are today. And since your portfolio might largely consist of bonds during retirement (since they’re less volatile than stocks and a safer bet for that stage of life), you’ll need to adjust for those lower yields by scaling back your withdrawal rate.
Suggestion For You:
To be clear, there’s nothing wrong with using the 4% rule as a starting point in managing your nest egg. But you may want to err on the side of withdrawing from your savings more conservatively for several reasons.
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