In today’s episode of Grow Money Business Grant covers the genesis of the 4% retirement spending rule and whether it still applies today.  We dive into updates to the initial research surrounding the 4% rule, how well the rule has held up over time, understanding if you have enough to retire, and what you might want to consider as you approach your own transition into retirement.

 

 

Show Notes

[02:15] Bill Bengen’s 4% Rule – Grant talks about one of the earliest research papers published on this matter.

[04:12] The origins of the 4% retirement rule – How Bill Bengen came up with the 4% rule and nuts & bolts of the research.

[08:47] Updates to the 4% rule – The author, Bill Bengen made several revisions to his paper to include the effects of recent developments in the economy. Grant discusses what lead to these revisions.

[13:15] Michael Kitces on the 4% rule – Michael Kitces is another financial planner who carried out extensive research on the 4% rule with data going all the way back to 1870. Grant talks about the findings of this newer research.

[22.45] Guyton & Klinger’s Dynamic Spending in Retirement – Jonathan Guyton and William Klinger published another research paper on this with a somewhat different approach. Grant discusses their dynamic adjustments concept in detail.

[29:20] Poking holes in your theories –  Wade Pfau is another researcher who approached this matter differently. Grant discusses his findings and differences between the other researches.

[32:02] Final thoughts – Grant talks about what you can take away from all these researches, how to figure out if you have enough to retire, and some key points to help you make wise investment decisions.

Resources