Investing With IBD Ep. 338 How Tailored Is Your Retirement? Revisiting The 4% Rule.
Sep 17, 2025
Bill Bengen, retirement researcher and creator of the 4% rule, shares decades of work on safe withdrawal strategies. He revisits the rule, explains why timing and early retirement risk matter, and outlines eight elements to tailor withdrawals. Topics include diversification boosts, valuation effects on safe rates, rebalancing, glide paths, and current withdrawal guidance.
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Use Diversification To Raise Safe Rates
- Diversify across asset classes to raise sustainable withdrawal rates; adding small-cap, international, mid-cap, micro-cap and T-bills increased his safe max.
- Use broad but sensible diversification rather than endlessly adding assets.
Index Withdrawals For Inflation
- Adjust withdrawals each year for inflation rather than keeping a fixed dollar amount.
- Treat annual cost-of-living adjustments like Social Security to maintain purchasing power.
Rebalance Once Per Year
- Rebalance annually as a practical rule for retirees.
- One-year rebalancing produces acceptable results across market conditions.
