Understanding the 4% Rule and Safe Withdrawal Rates
Two Quants and a Financial PlannerApril 10, 202300:30:07

Understanding the 4% Rule and Safe Withdrawal Rates

The 4% rule has become a standard used by many investors to determine the amount they can safely withdrawal in retirement. But most don't know where it came from, the assumptions used for it and how safe withdrawal rates can be impacted by the many factors we deal with as investors. In this episode we take a deep dive into the 4% rule and the concept of safe withdrawal rates and look at the answers to those questions.

01:37 - what is a safe withdrawal rate?
02:47 - what is the 4% rule and where did it come from?
05:13 - the assumptions used in the 4% rule safe withdrawal rate calculation
08:06 - how taxes impact safe withdrawal rates
09:28 - the pros and cons of rules of thumb like the 4% rule
11:22 - why can't investors withdraw more than 4% if the stock market returns 10% over time?
17:29 - how to handle return assumptions when calculating a safe withdrawal rate
21:57 - how often are withdrawal rates revisited during retirement based on actual outcomes?
28:16 - summary of episode

ABOUT THE PODCAST
Learning how to be a financial planner is one thing. Doing it is another. Follow along with new financial planners Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau) as experienced veteran Matt Zeigler (@cultishcreative) helps them navigate the complex world of financial planning and learn about the most important topics that impact all of our financial futures. From investments to retirement to college planning to estate planning to insurance and beyond, we will cover the major financial planning issues that impact all of our lives and will provide a framework to help investors tackle them. We hope you will join us on our learning journey.

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