It’s a question that plagues many would-be retirees: how much can I safely withdraw from my retirement savings each year without running out of money? The answer, according to the so-called “4% rule”, is 4%.
This rule of thumb has been used by financial planners for decades as a way to help people plan their retirement withdrawals. But is it still relevant in today’s low-interest environment? We take a look at the 4% rule and whether it still holds up.
Key Points
1. The 4% rule is a guideline for how much money you can withdraw from your retirement savings each year without running out of money
2. This rule assumes that you will invest in a mix of stocks and bonds and that your portfolio will grow by an average of 6% per year
3. Withdrawals are based on the previous year’s balance, so if your account balance goes down, you would need to adjust your withdrawals accordingly
4. You can use online calculators to help determine how much you should withdraw each year based on the 4% rule
5. Remember to factor in inflation when making withdrawals, as the purchasing power of your money will decrease over time
6. Review your withdrawal plan periodically to make sure it still makes sense for your current situation
The 4% rule is a guideline for how much money you can withdraw from your retirement savings each year without running out of money

When planning for retirement, the 4% rule is an important guideline to be aware of. This rule suggests that, if you begin by withdrawing 4% of your retirement savings each year and adjust for inflation every year after, it will allow for a sustainable withdrawal rate that goes a long way in ensuring that your funds last throughout your retirement.
It’s also important to note that the rule is based on a portfolio of stocks and bonds and an expected average inflation rate of 3% per year. As such, the rule should not be taken as gospel; rather it should serve as a general guideline in managing retirement assets.
Be sure to watch my free training on ‘How to pursue greater wealth in retirement by making ONE simple change to your finances’ by clicking here.
This rule assumes that you will invest in a mix of stocks and bonds and that your portfolio will grow by an average of 6% per year

Investing in a portfolio with a mix of stocks and bonds is an incredibly effective way to put your money to work and create significant wealth over time. By investing in both stocks and bonds, you are diversifying and substantially reducing risk.
Studies have shown that investing in this manner and targeting an average of 6% returns per year, allows investors for gradual growth over time rather than risking larger losses due to short-term fluctuations in the market.
Many financial advisors recommend investing for the long term to fully benefit from the average 6% return rate – with patience usually comes a reward. To ensure that you are taking advantage of the best investment opportunities, it’s important to regularly review your portfolio and adjust accordingly.
With proper diversification and vigilant monitoring, this strategy can result in substantial gains over time.
To find out how we help our clients determine the right risk of stocks and bonds for their personal situation, click here to schedule a one-on-one 30-minute introductory meeting.
Withdrawals are based on the previous year’s balance, so if your account balance goes down, you would need to adjust your withdrawals accordingly

When managing retirement withdrawals, it is important to ensure that withdrawals are based on the previous year’s account balance. You will likely need to adjust your withdrawals periodically. This is especially true if your account balance drops in relation to the previous year.
It is important to stay informed and up to date with regard to any changes this may have on your withdrawal amount so that you can properly manage your funds. Working with a financial advisor can help you adjust your withdrawal rate so you can maximize your withdrawals while planning for your future withdrawal needs.
You can use online calculators to help determine how much you should withdraw each year based on the 4% rule

With the power of technology and information easily accessible today, it is easier than ever to monitor our financial health and progress. Online calculators are just one way to help you determine how much you should withdraw from your retirement savings each year.
The 4% rule is a popular guide when it comes to deciding how much money we can safely withdraw from our retirement accounts every year without running out of funds before the end of our expected lifespans.
This important decision can be made easier by working with a financial advisor that makes this complex process approachable and understandable for everyone.
Don’t forget to watch my free training on ‘How to pursue greater wealth in retirement by making ONE simple change to your finances’ by clicking here.
Remember to factor in inflation when making withdrawals, as the purchasing power of your money will decrease over time

As you plan your future financial goals, it is important to consider the impact inflation can have on your long-term savings. When making withdrawals from an investment or savings account, be sure to keep in mind that the purchasing power of your money will gradually decline over time.
Taking into account inflation rates when calculating how much you withdraw can ensure that you will have enough for both present needs and future wants. There are many ways a financial advisor can help you better understand the effects of inflation and plan for a secure financial future.
To find out more about how inflation will affect your purchasing power over time, and how to protect yourself from it, click here to schedule a one-on-one 30-minute introductory meeting.
Review your withdrawal plan periodically to make sure it still makes sense for your current situation

Retirement planning is an important process that should be reviewed often, as your financial needs and goals are likely to change over time. Establishing a withdrawal plan can help secure your financial future, but it is important to make sure this plan remains suitable for your current life stage and financial objectives.
It is recommended that retirement plans are revisited at least once a year to ensure they are still providing the desired results. If you have questions about your retirement plan or if it needs updating, contact a financial advisor.
Neglecting to review your circumstances can lead to unnecessary risks that threaten the productivity of your investments. Evaluating your retirement portfolio regularly can keep you in control of your finances and provide security both now and in the future.
Conclusion
The 4% rule is a guideline that can help you determine how much money you can withdraw from your retirement savings each year without running out of money. This rule assumes that you will invest in a mix of stocks and bonds, that your portfolio will grow by an average of 6% per year, and that inflation is 3% per year.
Withdrawals are based on the previous year’s balance, so if your account balance goes down, you would need to adjust your withdrawals accordingly. You can use online calculators and obtain the help of an experienced financial advisor to help determine how much you should withdraw each year based on the 4% rule.
Remember to factor in inflation when making withdrawals, as the purchasing power of your money will decrease over time. Review your withdrawal plan periodically to make sure it still makes sense for your current situation.
If you want to find out how we can help you with the optimum withdrawal rate for your portfolio, schedule a 30-minute introductory meeting by clicking here.
The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.