Can the 4% Rule Be Salvaged?
My colleague Catherine Brock recently made a compelling case for why the traditional 4% rule for retirement savings may be at risk because of the craziness that 2020 has brought us. The challenge presented by that article, however, is that the most straightforward solution -- save more -- is easier said than done.
Shifting to a 3% or 3.5% rule may make a person's retirement portfolio more sustainable, but it comes with two very big risks. First, hitting that target is harder than hitting one based on the 4% rule. Second, stretching for the bigger nest eggs those numbers require puts you at a greater risk of saving too much, spending too little, and not enjoying the money you worked your career to save. Those risks raise a key question: Can the 4% rule be salvaged?
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Source Fool.com
