The Myth of Steady Retirement Spending, and Why Reality May Cost Less

The Four Percent Rule helps retirees guesstimate their portfolio withdrawal rate.   It seeks to provide a steady stream of funds to a retiree. It is a rough rule of thumb for a ‘safe’ rate for the withdrawals.  The attached article, written by Peter Finch,  gives a different perspective on the Four Percent Rule and how life works differently than rules.


” There’s a lot of research to suggest that following the 4 percent rule — or something close to 4 percent — is a good way to make your savings last. This approach is at the heart of many popular online retirement calculators.

But does retirement spending actually work that way? Do retirees really spend a fixed amount each year for the rest of their lives?

They do not, many financial advisers and academics say. “This is my 35th year in practice, and I can tell you none of my clients has ever spent on a straight line,” said Neal Van Zutphen, a certified financial planner with the firm Intrinsic Wealth Counsel in Tempe, Ariz. “Your spending habits and your spending needs will change over time.”” 

Our March, 2017 newsletter covered this topic.  Retirement planning helps you to maximize your use of savings.  The right professional helping you along the way can greatly streamline this process,  alleviating any pitfalls and include your differences as human beings.  Trying to create and manage your retirement income by yourself can be challenging. You should always seek out the advice of a qualified tax and financial professional who can work with you to make sure that your plan is properly implemented on your specific terms. We have attached our original article for you as well.

Click here to read the article from the NY Times.

The Four Percent Rule May No Longer Apply for Retirement_WFP article

Peter Finch. ” The Myth of Steady Retirement Spending , and Why Reality May cost Less”, New York Times, Nov. 29, 2018. Web 05 Dec 18.


Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.  Westfield Financial Planning is not affiliated with the NY Times or Peter Lynch.