Afford Anything | Make Smart Choices About Your Money, Time And Productivity

#377: Today’s episode is sheer retirement nerd bliss. We talk to the creator of the 4 percent retirement safe withdrawal rule, Bill Bengen. If you’re new to retirement planning, you might not yet grasp the gravity of this. Let’s cut to the chase: the 4 percent rule is one of the most revolutionary, groundbreaking insights in the field of retirement research in the past 30 years. To understand why, let’s climb in our time machines and return to 1994. Back then, many financial advisors were telling their clients that they could safely withdraw 7 percent of their retirement portfolio each year. After all, the simplistic logic went, the stock market has historically yielded between 7 to 9 percent returns, so that type of withdrawal rate shouldn’t dwindle the principle … right? ⠀ Bill Bengen, an MIT graduate and former rocket scientist, decided to build a better model. He looked at the performance of investment portfolios across 30-year time horizons, beginning in 1926. Under the assumption that the portfolio is i