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Interview w/ Originator of 4% Rule
01-23-2021, 09:22 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: The Beautiful Blue Ridge Mountains
Posts: 2,791
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Interview w/ Originator of 4% Rule
Barron's has an interview with William Bengen that's an interesting read. The article is behind a paywall but it showed up on my Apple News feed (close the window asking for subscribing to read it).
The Originator of ‘the 4% Rule’ Thinks It’s Off the Mark. He Says It Now Could Be Up to 4.5%
I'm not sure the actual interview makes as big a deal of 4% vs. 4.5% as the title implies, and I'm not so bothered by his change in asset allocation, but I found the history of his research interesting.
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01-23-2021, 09:33 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Dec 2016
Location: DC area
Posts: 2,495
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Bengen first suggested the 4.5% rule in 2006. Barrons is a little late to the party.
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FI and Semi-ER March 24, 2017
Consulting to stay engaged
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01-23-2021, 10:45 AM
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#3
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Thinks s/he gets paid by the post
Join Date: May 2019
Posts: 2,818
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Quote:
Originally Posted by USGrant1962
Bengen first suggested the 4.5% rule in 2006. Barrons is a little late to the party.
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Exactly, and he even suggested 5% last year.
https://www.marketwatch.com/story/th...it-11603380557
Bengen says based on the current environment he thinks a new retiree should be safe if they start with a withdrawal rate of…no more than 5%. “That’s what I use myself,” Bengen told me when we spoke by phone.
OK, so it’s not an earth-shattering change from 4%. It’s even less of a change from the updated “worst case scenario” rule of 4.5%. But the 4% rule is now a 5% rule, if you like.
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01-23-2021, 11:20 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,298
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IIRC, using 5%WR in the inflation adjusted withdrawal concept he espouses would lead to running out of money in certain starting year scenarios of retirement.
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TGIM
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01-23-2021, 02:21 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jun 2017
Location: Western NC
Posts: 4,633
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Quote:
Originally Posted by Dtail
IIRC, using 5%WR in the inflation adjusted withdrawal concept he espouses would lead to running out of money in certain starting year scenarios of retirement.
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Relative few starting years...since WWII the biggest risk has been retiring before periods of high inflation (e.g. late-1960s retirees)
But I don't expect double-digit inflation to be an issue anytime soon...
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01-23-2021, 02:29 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,502
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Yes. He says 4.5 is the MaxSafe historic rate, but doesn't think we're in a worse case scenario. He's looking at low inflation to continue.
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