Phil's Financial Tip of the Day:
Testing the 4%-a-Year Retirement Rule
The adviser who coined this rule of thumb for withdrawals is watching how it holds up in tough markets
The next five years could determine whether a rule of thumb for retirees' withdrawals from their portfolios remains valid in these turbulent times, says Bill Bengen, a financial planner in Southern California.
Mr. Bengen is the creator of the 4% rule for retirement withdrawals.
In a study published in 1994, he said that if retirees withdrew 4% of their nest egg in the first year, and then increased the dollar amount by the inflation rate every year, their savings would easily last 30 years. He assumed that the portfolio was held in a tax-deferred account and was evenly split between large-company stocks and U.S. Treasury bonds.
To read the rest of the article from The Wall Street Journal
http://online.wsj.com/article/SB10001424052970203960804577241143142670660.html?mod=e2fb
As a footnote, Dave Ramsey recommends having 8% to live off of your next egg as a rule of thumb in determining when you can retire.
Quote of the Day from Dave Ramsey.com:
You cannot dream yourself into a character: you must hammer and forge yourself into one. — Henry D. Thoreau
Please listen to the Dave Ramsey show live on WOR 710 from 2-4 PM EST. You can also listen to the 3rd hour 4-5 PM EST on Dave Ramsey.com and at 8PM on WOR 710
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