Retirement Answer Man

Have you considered what kind of withdrawal strategy you plan to use in retirement? There are more to choose from than you may realize. Over the next 4 episodes, we will focus on different withdrawal strategies and how to choose one that fits your needs. 

On this episode of Retirement Answer Man, we’ll cover the most notorious retirement withdrawal strategy: the 4% rule. In week 2 of this series, we’ll discuss the safety-first strategy. In the 3rd episode of the Retirement Withdrawal Strategies series, we’ll learn how to utilize matching liabilities to spending, and finally, in the last week of July, you will learn how to create a framework to help you decide which retirement withdrawal strategy will work best for you. 

This episode is packed with information and even includes an interview with Jamie Hopkins, author of Rewirement. Get ready to buckle down and learn what you need to start the decumulation phase of life. 

There are 3 big rocks in retirement planning

It can be easy to get sidetracked when planning for retirement. There are so many different areas that you need to consider. You don’t want to focus on the wrong thing, but how are you supposed to know what the right thing is when there is so much information out there. I believe that you need to focus on the 3 rocks of retirement planning.

  1. Feasibility - This means what is possible given your resources. You’ll want to figure out how to squeeze the most life out of the assets that you have to create the best life that you can. 
  2. Resiliency - You don’t want to get thrown off course by inflation, bad markets, or life. This is where choosing the best withdrawal strategy comes into play.
  3. Optionality - This covers the tools you can use to enhance the journey - tax planning asset allocation etc

What is the 4% rule?

The 4% rule was created by William Bengen in 1994 in a landmark academic article. Mr. Bengen wanted to know if there was a fixed amount of money that you could pull from your assets safely each year and never run out of money. To investigate, Bengen looked at historical data and ran models to search for a percentage rate that one could withdraw safely over a typical lifetime. He learned that 4% is the amount that you could withdraw from a portfolio to stay ahead of inflation yet never run out of money. Over the years the paper has gained momentum until it eventually became a rule of thumb.

What are the advantages and disadvantages of the 4% rule?

As with any withdrawal strategy or general rule, there will be advantages and disadvantages. One advantage of the 4% rule is that it provides you with a safe withdrawal rate. You can be confident that your portfolio is secure and you won’t run out of money. Another advantage is that this rule is simple. 

Simplicity is nice because it is easy to follow, however, everyone is different and what works for everyone may not work for you. The 4% rule may be too simplistic and too unbending. The 4% rule also doesn't account for changing market conditions, inflation, and life surprises. Another disadvantage is that you are likely to die with more money than you would like to. This could lead to regret. 

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  • [2:40] There are 3 big rocks in retirement planning


  • [7:40] Going from accumulation to decumulation can be a challenge
  • [13:30] How to get in the right mind frame to spend in retirement
  • [19:53] Set boundaries at work to create balance
  • [22:45] What can you do to feel better about a decreasing balance sheet


  • [29:48] The 4% rule is a safe withdrawal rate
  • [32:31] Advantages of a safe withdrawal rate


  • [38:15] Mountain bike questions
  • [42:22] Assumed portfolio investment returns
  • [51:24] Can you do Roth conversions if you plan to retire early?
  • [54:44] Does home equity help when considering net worth?


Resources Mentioned In This Episode

BOOK - Rewirement by Jamie Hopkins

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM385.mp3
Category:general -- posted at: 5:00am CDT