No. of Recommendations: 7
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?

The thing is, a 4% withdrawal vs. a 5% withdrawal isn't a 1% difference up in their income - the 5% withdrawal is a 25% increase in their income vs. a 4% withdrawal, and a 4% withdrawal is a 20% decrease vs. a 5% withdrawal.

I look at it as a guideline...some years you are going to go over. So some years you need to go under.

Until you hit 70 1/2 and the IRS starts dictating what you remove from tax advantaged accounts, that's correct - but even then, as many have said, you don't have to spend the entire (or even any) of the RMD - you can always invest it in a taxable account.

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.

Yes, but that's 4.08% vs. 4.12%, not 4% vs. 5%

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