3 ms·
> - 4% withdrawal rate. Note: the "Four Percent Rule" that many people go by is not "Take out 4% of your portfolio every year." It is "Take out 4% in the first
by throw0101a 5y ago
> - 4% withdrawal rate.
Note: the "Four Percent Rule" that many people go by is not "Take out 4% of your portfolio every year." It is "Take out 4% in the first year, and then adjust by inflation every subsequent year."
* https://en.wikipedia.org/wiki/William_Bengen https://en.wikipedia.org/wiki/William_Bengen
* https://en.wikipedia.org/wiki/Trinity_study https://en.wikipedia.org/wiki/Trinity_study
So:
* Year 1: Take out 4% of portfolio.
* Year 2: Year 1 amount + inflation of Year 1.
* Year 3: Year 2 amount + inflation of Year 2.
[…]
* Year N: Year (N-1) amount + inflation of Year (N-1).
Though as you age the inflation adjustment tends to be less important as people tend to spend less.