No. of Recommendations: 0
Personally I've always looked at the 4% burn rate as a guideline and as implying 25x living expenses as the minimum you can consider retiring on. It is merely a ballpark starting point for further refinements.

You can certainly see how the low interest rates of today can be a problem for those who invest conservatively and still try to adhere to the 4% rule. I like the idea of an 8%/yr total return target. Then spending half your income and saving half looks far more reliable.

But the bottom line still is, if you don't use the 4% rule what do you do? Keep working until you can retire on dividend income? At least 4% shines a light on a strategy that can let you retire a bit sooner and with reasonable chances of covering your expenses for life.
Print the post  

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement