How Much Can You Safely Withdraw? – The 4% Rule for Retirement
00:00:00.000 | I want to talk about a rule that we've talked about on the show and that's the 4% rule.
00:00:03.440 | Yeah, this is the granddaddy of all rules of thumb and this is the idea of the 4% rule
00:00:07.880 | is this is the amount of your portfolio that you can withdraw each year during retirement.
00:00:13.820 | So if you have a million dollar portfolio in the first year of retirement, you can safely
00:00:18.800 | withdraw $40,000 or 4% of that number and you can have a very high confidence rate that
00:00:25.440 | money will last you throughout your retirement.
00:00:27.920 | And there are a bazillion different caveats that going into solving the what level can
00:00:33.040 | I really retire at, the length that you're going to be living off your portfolio matters.
00:00:37.280 | There's something called sequence of return risk, meaning that the first few years after
00:00:40.880 | you retire, what the market does or your rate of return really impacts that.
00:00:45.440 | There's also you have to factor in what are interest rates during the period that you
00:00:48.920 | retire for the 4% rule I think is a fantastic study point, but when you're actually making
00:00:53.240 | a "should I retire" decision, there's a bunch of other factors you need to consider.