When it comes to spending money in retirement, there’s one rule of thumb — the 4% rule — that has persisted for decades. The 4% withdrawal rule calls for retirees to withdraw that portion from their investment portfolio in the first year of retirement. In each subsequent year, the amount of those withdrawals is adjusted for inflation. Financial planner William Bengen first identified the 4% rate as a sweet spot for safe withdrawals in 1994. Since then, the world — and retirement — has changed. Yet 61% of financial advisors are still using the 4% withdrawal rule, according to research from David Blanchett, managing director and head of retirement research at PGIM DC Solutions. Now, researchers are looking at the most effective ways to integrate the 4% rule with today’s portfolios. Many baby boomers face a challenge of how to maintain their lifestyle once they retire. Social Security benefits typically replace about 40% of a worker’s…
