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Subject:  Re: Retirement Needs Formula? Date:  10/6/2013  9:05 AM
Author:  buzman Number:  73454 of 88807

>>>>>I think the 4% rule works provided your average return is 8% or better. Then theoretically your net worth increases every year, and that 4% gives you more money every year as your investments grow.<<<<<

Everyone has made some valid points.

Assuming an 8% return in this environment is very, very risky.

For years this was the default number for pensions (public & private)but many have adjusted downward.

In my practice we use between 5.5% and 7.4%, plus we illustrate the effect of a two year bear market at the beginning of retirement. I like to show the effect of 4% return, too.

The risk for investors is many online calculators don't reflect variability of returns or sequence of returns.

William Bernstein also recommends using less than 4%. Every retire (pre or post) should power down their computer and read The Investors Manifesto.
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