Should You Plan On Your Retirement Lasting 30 Years Or 40?

The 4% rule has a planning horizon of thirty years. As I mentioned during the discussion of the PMT formula, different time horizons suggest different spending rates. An eighty-five-year old is not necessarily limited to a 4% spending rate.

The 4% rule gets its name from its suggested spending rate for the first year of retirement. Beyond that, the spending rate evolves as inflation guides future spending and portfolio returns guide the amount of remaining financial assets.

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Damian J. Sylvia

Retirement Income Solutions

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