Forget the 4% Rule: Here's What You Should Really Be Looking at During Retirement
The 4% Rule has long been a staple of retirement planning. The basic premise of that rule is that if you keep a well-diversified and balanced portfolio in retirement, you can withdraw 4% of the portfolio's initial value in your first year of retirement. Then, you can adjust your withdrawal amount for inflation every year after that and have a very good chance of seeing your money last at least as long as your retirement.
While the 4% Rule is a great strategy for figuring out how much you should save for retirement, it's less than optimal when it comes to actually managing your money once you're retired. For one thing, people's expenses -- outside of healthcare -- tend to decline the farther into retirement they get. For another, the 4% Rule is based on making it through a really tough economy and market. On average, with the 4% Rule, you're likely to end your retirement with more than you started with.
With those realities in mind, it might be time to forget the 4% rule when it comes to how you spend your retirement nest egg. Instead, here are a few things you should really be looking at during retirement.
Source Fool.com
