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Even with modest inflation rates of 2% to 3%, your $40,000 annual withdrawal from your $1 million nest egg won't stretch as far in 10 or 15 years as it did in your first year of retirement.
Over time, inflation reduces the value of money, making everyday expenses more costly. Data from the U.S. Bureau of Labor Statistics indicates that inflation has averaged between 2.5% and 3% ...
Running some different scenarios through a retirement calculator can help you estimate how long your money should last. Example #1: You have $1 million in savings and earn a 6% annual return ...
The problem with giving a general calculation of how long your specific retirement funds will last is that no rule will do this perfectly, including the 4% rule. Some drawbacks to the 4% rule include:
The 4% is a retirement planning rule that suggests you can safely withdraw 4% of your retirement portfolio balance each year, adjusted for inflation, without running out of money.
Since the mid-1990s, inflation has stayed very close to the Federal Reserve's benchmark of 2% per year, often dipping much lower than that. The upshot has been a long run in which prices have ...
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