The 4% Rule Explained: A Tool for Estimating Your Retirement Nest Egg

The 4% rule has its origin in research by financial advisor Bill Bengen, who studied 50 years of market data and concluded that a retiree could withdraw 4% of their portfolio annually without running out of money over a 33-year window. In this episode, Ryan explains that history, but pushes back on using it as a live distribution strategy since it does not account for your actual tax situation, spending needs, or investment mix.Where Ryan finds it most useful is as a planning tool for people not yet retired. If you multiply your expected annual spending by 25, you get a rough target for how large your nest egg needs to be. It is a quick, back-of-the-napkin estimate that at least gets you pointed in the right direction. This episode covers general retirement planning concepts; consult a financial planner for a plan specific to your goals.Find "Your Fiscal Physical" the book on AmazonIf you have suggestions or feedback, please email us at: [email protected], as always, Stay the Course!