Will the 4% Rule Lead to Financial Ruin? #Finance

43 thoughts on “Will the 4% Rule Lead to Financial Ruin? #Finance”

1. Thanks

2. Jones Melissa Taylor Susan Martinez Jennifer

3. Wall Street Journal has gone down hill since the Murdochs bought it……I’ve been reading it every day since 1978.

4. Excellent video / analysis Rob! Summary at the end is absolutely spot on. I am doing exactly that and can advocate / attest to it's legitimacy on all fronts.

5. They’ve been saying future returns would be low for decades. I bought into it a decade ago and didn’t invest correctly. It’s all crapola

6. Another well presented topic!
   The amazing value we all get from Rob and a few other excellent YouTube channels is incredible.

   As a retired engineer, one thing I tell young engineers is use YouTube to further your education. The amount of great content and knowledge available at your fingertips exceeds nearly anything you can get through formal education.

7. 1. Any study that says, "if you invest in outer Mongolia your safe withdrawal rate is 0.02%" is useless.

   2. If one's primary income is from the 401k/ira, then taking SS early allows one to keep more of the ira $$ invested for longer, especially in the early "sequence of return risk" time period. So I don't understand how waiting for SS & taking more from the ira early is helpful. At 5% return, the break even is about age 93. If one is living off a pension, that's different.

8. 4% rule has to work, Dave Ramsey say 8% and he can’t be wrong! Great job Rob.

9. I wish I could give this video 2 thumbs up instead of just one

10. Rob Berger, keeping people sane while the world tries to make you insane. Thank you! We will continue spending.

11. This is fantastic, very informative. Any chance you could address modeling of different longevity ages for couples in an upcoming video? I've found research that the average age women are widowed is 59 (!), and average duration of their lives as widows is an additional 12+ years. So using different longevity ages in NR is important– and leads to VERY different outcomes.

12. Best thing money can buy is financial freedom ❤❤❤ that!

13. Rob, the probability of running out of money should be multiplied by the probability of reaching age 90 to get the risk. If you don't live until 90, ou are much less likely to run out of money.

14. How would a 0% rule fair ?

15. Well, it'd better not… otherwise, what will my 8% Ramsey withdrawals lead to then?!? ( oДo)

16. It's "New Math". Academics are always trying to reinvent the wheel, especially if they are in an established field where we know what works. We need new math because they don't like teaching the same old methods that have worked for the last 50 years. Same thing for the 4% rule.

17. The ideal is to do what my Boomer dad has done… 1) invest in your education and take it seriously as if your future happiness depended on it, 2) make good money slow and steady with pay raises while still enjoying life and being generous to family and charities, 3) invest conservatively and never panic, 4) avoid credit card and other avoidable fees, and 5) keep working beyond when you could easily retire just because you love working… and be open to a career change if your current career is not something you love. After retiring the first time from the human resources world in his 60s, my dad retooled and got a PhD in business so he could be an online associate professor for a major university, which is a shockingly easy gig once you have such credentials. He just retired at 80, primarily due to dementia that runs in the family. But what a wise provider, what a loving husband, what a loving father, grandfather, and great grandfather. It is my somber and humble privilege to advise him and my mom now (hence I cling to the wisdom of this channel given I am just a software engineer), and it goes a long way that as a child of Cuyahoga Falls and forever Buckeye fan despite any dementia, he sees your Ohio State footballs and knows you and I won't let him and his wife down.

18. Terrible click bait that WSJ has been doing more and more of. Plus, it did a disservice to Cederberg’s paper.

19. I always appreciate your analysis of these financial "rules" and "truths". I am staying invested in the market.

20. Great video, Rob. I'm a big fan of the 4% rule. If you get into a bind, you can always adjust this percentage down in a bad year(s). Keep em coming! FYI, the Bruins are getting ready to take over the Big 10! 🙂

21. Hi Rob, Thanks for all the great information! Wouldn't it simply be best to withdraw a flat rate of 4 or 5 percent each year. I withdraw a quarterly rate of 1.25% This way I can really ride the wave of the market. On a very bad year I may withdraw less. I know it can be difficult for someone who wants a steady income to rely on. On a 80/20 portfolio weighed a bit heavier in tech , back tested seemed to work very well.

22. Hi Rob, you mention worrying about the 4% rule is worrying about the extreme, but if I recall, the 4% rule works in 98% or so of cases, so there are 2% of cases, even if low, where the 4% did not pass. It may still be considered the extreme, but that is not foolproof.

23. The voice of reason!

24. I concur, it‘s all about riskmanagmenet. But the Cederburg et al. findings are fascinating in regard to the question of how risky are bonds in the long run in respect to ruin probability and end wealth. It had and still has a huge impact on my asset allocation.

25. Agree on finding some work you don't hate and can do well into retirement. Especially if retiring early and withdrawing 3%, finding a way to earn $30K is the equivalent of saving another million dollars.

26. Was that article in the printed Wall Street Journal?
    The online version puts a lot of rabbit holes to click onto. That’s not in the print. Beware reading anything that’s not in the printed version.
    Overall, I agree with your opinion we’re all different and deal with the retirement in different ways .

27. Thanks Rob! I think of the 4% not as a rule but just an observation made from 100 years of data. Who knows, maybe 30 years from now they will determine the 2024 max safe to be 8% ! Also I read recently the average retirement is 18 years ( you are correct to say the 30 year is an outlier).

28. Call me cynical but it’s in the interest of the mutual fund world to get us to be conservative and underspend. This way they will maximise assets under management and get the most fees. It’s one of the few industries where planning for the worst is almost expected. Can you imagine living all facets of life in this way. You would never leave the house.

29. So…not 8% like Ramsey suggests? haha

30. If we were invaded by a foreign power, my future stock market returns would be the least of my concerns haha

31. OK so your in the US and I'm in Canada and US annuities seem like different product than we have. That said in Canada you absolutely can buy an indexed annuity. In fact for an apple's to apples comparison I would com
    pare monthly income from a 4% withdrawal RRIF with 2% index (Canada) to an annuity with a 2% index for the same starting Capital. For comparison purposes. And on caveat gender matters from payout standpoint.

    Makes me wonder how insurance companies will handle transgender people from an assumed risk persective as sex is a large determinate in product pricing (risk) currently.

32. Good advice.

33. My approach is to invest in global stocks and have 5 years emergency funds.

34. Thank You Rob 😊

35. Are there any vids on the best closed-end funds that pay a monthly dividend, and the pros and cons to owning them? TIA

36. Any article that puts weasel words like could, might, and possibly right up front isn’t news. It’s speculation and not worth reading. I’m not sure exactly when it became acceptable practice for so called journalists to publish their speculations rather than actual news based on facts, but I hope it ends soon.

37. Before retirement I used the 4% rule as a guideline. Now that I am retirement I exclusively use a CAPE ratio based variable safe withdrawal rate formula to determine my withdrawal. I use the free tool from Larsten Jeske, from Early Retirement Now, as my go to tool to determine my withdrawal numbers. Can you at some point discuss this tool if you are aware of it and provide your thoughts on it.

38. Great video, thanks for sharing. Always an analytical approach.

39. Excellent video Rob. I read this article when it first came out. I’m a subscriber to the WSJ. The quality of most of the regular news articles have been pretty poor. And they show lots of bias. So I’m not surprised at your take on this. Jason Zweig is still awesome though!

40. Trying to sell a 2,5% withdrawal rate is just telling people to give up and spend it all now. If the 4% rule fails you’ll likely be old enough that it won’t matter anyway

41. Honestly, this makes me more inclined to spend more money in the first decade of my retirement as long as the market is not in the tank.

42. Thank you Rob; I really appreciate and enjoy these presentations and your reasoned, logical, and the level-headed approach to presenting these data.

43. Rob thanks for putting things into a logical perspective , your wisdom and knowledge is always appreciated

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