This week I’m talking about the 4% rule. 

The 4% Rule is a short-hand rule of thumb that helps you calculate how much of your portfolio you can safely withdraw in retirement without running out of money. Its a useful tool to help you decide how much of your portfolio to spend in retirement, but it has some serious limitations. 

Today, I’m talking about a better alternative to using the 4% rule to determine how much money to withdraw in retirement. It’s a monte carlo analysis. A monte carlo analysis will test your retirement and spending over many different scenarios, and recommend a spending rate that is unique to your situation.

A monte carlo analysis that we use with our clients lives your retirement 1000 times in good, bad, ugly scenarios to determine based on your retirement age, spending, portfolio allocation, social security decision, etc - how all of these factors contribute to answering one simple question:

Will all of these decisions lead to a secure retirement or will you run out of money in retirement, and the likelihood that that will happen. 

If you’d like to dive deeper than a rule of thumb 4% rule can do, just send me an email and I’ll send you a 2 page worksheet so you can see for yourself your personalized results whether or not the lifestyle you envisioned for your retirement is sustainable. 

Just email me at [email protected]. That’s [email protected]. I’ll send you the worksheet and then once you send it completed back to me, I’ll send your personalized results for free. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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