withdrawal rate

The Four Percent Rule

Someone asked us this past week if we would explain what the “Four Percent” rule is and how it came about. The Four Percent rule is based on a study by a financial advisor named William Bengen. His study suggested that one could safely withdraw 4% of their starting portfolio value for 30 years without running out of money. The rule was later popularized by a 1998 study based on the same data and a similar analysis. Both studies conclude what “the maximum ‘safe’ historical withdrawal rate” is. Call us if you have any questions about how to apply this rule of thumb factoring in the changing economy, or the tax nature of your funds. We’re always here to help.

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