Rethinking the ‘4 Percent Rule’ for Retirement Planning

By Salin Bank on February 18, 2014

Most retirees have at least one thing in common: to outlive their money. For years, many soon-to-be retirees have relied on the so-called gold standard of retirement planning called the “4 percent rule.”

Created in 1993 by financial planner Bill Bengen, the 4 percent rule dictates that if retirees withdraw no more than 4 percent from their retirement savings every year, their nest egg should last for the rest of their life.

The problem is that the percentage itself was calculated in the 1990s and at a time when portfolios were earning about 8 percent. Unfortunately, that’s no longer a reality. Most portfolios today earn about 3.5 percent to 4 percent.

Changing economic times make it more important than ever to work with an investment planning expert who can help you determine realistic financial goals. At Salin Bank, our wealth management team members will work with you, one on one, to understand your financial objectives and help you create a customized financial plan for your future. Whether you are a business owner providing retirement benefits to your employees, a young professional just starting out in the professional world, or someone thinking about retirement, our banking specialists will provide the information, tools, and objective advice you need to make informed decisions about savings, investments and retirement.

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