The 4% Rule Has This Flaw All Retirees Should Know About
Key takeaways
- The 4% rule has long been considered one of the simplest ways to estimate how much you can safely withdraw from your retirement savings over time.
- For example, if you retire with $1 million, under the 4% rule, you'd withdraw $40,000 your first year.
- In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
The 4% rule has long been considered one of the simplest ways to estimate how much you can safely withdraw from your retirement savings over time. Under the rule, you withdraw 4% of your portfolio during your first year of retirement and then increase that dollar amount each year to keep up with inflation.
For example, if you retire with $1 million, under the 4% rule, you'd withdraw $40,000 your first year. If inflation rises 1%, you'd withdraw $40,400 the next year. And repeat.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »