In the world of early retirees, we have a concept that goes by names like “The 4% rule”, or “The 4% Safe Withdrawal Rate”, or simply “The SWR.” As with all
Summary: The article discusses the 4% Rule, a guideline used by early retirees to determine a safe withdrawal rate from retirement savings. This concept, also known as the Safe Withdrawal Rate (SWR), suggests that retirees can withdraw 4% of their investment portfolio annually without running out of money over a typical 30-year retirement period.
The 4% Rule originated from the "Trinity Study," which analyzed historical stock and bond returns to identify sustainable withdrawal rates. It emphasizes the importance of balancing risk and return in retirement planning, allowing retirees to enjoy their savings while minimizing the risk of depleting their funds prematurely. Variations of the rule exist, taking into account factors such as market conditions and individual spending needs.
Keywords: retirement planning, withdrawal rate, financial independence, investment strategy, sustainable income
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