No. of Recommendations: 3
Are people really that stuck on the "4% rule" where a 1% difference up or down in their income in one year is that important?
I look at it as a guideline...some years you are going to go over. So some years you need to go under.

It is truly math in slow motion...recompute every so often and adjust, as required. The odds are you will have extra just by knowing about the 4% rule and sort of following it.

The math behind the 4% rule guarantees, with a very high probability (90% or maybe 97%??) that you will end up with money left over after 30 years.
IMO, the only ones that need to pay exact close attention to how they compute inflation and CPI are those involved with large numbers of people, such as pensions, SS, etc.

If you have $1M in savings you are starting by withdrawing $40K per year. The difference between withdrawing 2% more or 3% more in the second year is $40,800 vs 41,200 or $400. Sure, if you do this every year for 10 or 20 years the difference is sizable. But you do get a chance every year to look at what your balance is doing and what the market is doing and make adjustments -- you aren't forced to take a raise every year. If you have significantly more than $1M or $2M then your numbers are bigger than a $400 difference and you are probably doing OK anyway.

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