The Rational Reminder Podcast | RR #164 - Comprehensive Overview: The 4% Rule @rationalreminder | Uploaded August 2021 | Updated October 2024, 17 hours ago.
Today’s episode is the first that takes a new format we are piloting, where we compile clips from the most valuable conversations we have had in different episodes on a given topic. To kick it all off we will be devoting this episode to inflation-adjusted retirement spending and the nuances of the 4% rule. We start off with a clip from our conversation with Bill Bengen, creator of the 4% rule, where he explains the concept. From there, we pull up an excerpt from an interview with Wade Pfau, hearing him weigh in on how this rule only works in the context of the US and Canada. Next up, Fred Vetesse talks about the changes in stock and bond yields and how they further problematize the 4% rule. After that, Professor Moshe Molevsky makes the case for flexible spending, followed by Michale Kitces with his favourite variable spending rules. We grab a segment from our chat with Scott Rieckens where he argues that the 4% rule should be seen as more of a guideline for making financial decisions than a rule. Bill Bengen’s interview then features again as we hear his comments on the effects of small-cap value stocks and cyclically adjusted price-earnings on safe withdrawal rates. Tune in for this fascinating set of highlights, the main point of which is that the 4% rule should rather be used as a guideline for financial planning and that where actual spending is concerned, a flexible approach is more sensible.
Timestamps:
0:00 Intro
2:45 Comprehensive Overview The 4% Rule
4:49 What is the 4% rule?
9:35 Issues surrounding studies on the 4% Rule
13:19 Are things different today?
15:27 The importance of flexibility in retirement spending
21:06 Variable spending strategies in retirement
34:22 The 4% rule in the FIRE community
41:02 Longer withdrawal periods
46:04 The 4.5% Rule & Small Cap Value Stocks with safer withdrawal rate
51:56 Safe withdrawal rate & CAPE
56:31 Conclusion
Links From Today’s Episode:
Rational Reminder on iTunes — itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — rationalreminder.ca
Shop Merch - shop.rationalreminder.ca
Join the Community - community.rationalreminder.ca
Follow us on Twitter - twitter.com/RationalRemind
Follow us on Instagram - @rationalreminder
Benjamin on Twitter — twitter.com/benjaminwfelix
Cameron on Twitter — twitter.com/CameronPassmore
Episode 135: William Bengen: The 5% Rule for Retirement Spending — rationalreminder.ca/podcast/135
Episode 89: Wade Pfau: A Sensible Approach to Retirement Income Planning — rationalreminder.ca/podcast/89
Episode 104: Fred Vettese: A Complete Guide to Retirement Income — rationalreminder.ca/podcast/104
Episode 112: Michael Kitces on Retirement Research and the Business of Financial Advice — rationalreminder.ca/podcast/112
Episode 95: Scott Rieckens (Playing with FIRE): Finding Financial Education, Perspective, and Freedom — rationalreminder.ca/podcast/95
Today’s episode is the first that takes a new format we are piloting, where we compile clips from the most valuable conversations we have had in different episodes on a given topic. To kick it all off we will be devoting this episode to inflation-adjusted retirement spending and the nuances of the 4% rule. We start off with a clip from our conversation with Bill Bengen, creator of the 4% rule, where he explains the concept. From there, we pull up an excerpt from an interview with Wade Pfau, hearing him weigh in on how this rule only works in the context of the US and Canada. Next up, Fred Vetesse talks about the changes in stock and bond yields and how they further problematize the 4% rule. After that, Professor Moshe Molevsky makes the case for flexible spending, followed by Michale Kitces with his favourite variable spending rules. We grab a segment from our chat with Scott Rieckens where he argues that the 4% rule should be seen as more of a guideline for making financial decisions than a rule. Bill Bengen’s interview then features again as we hear his comments on the effects of small-cap value stocks and cyclically adjusted price-earnings on safe withdrawal rates. Tune in for this fascinating set of highlights, the main point of which is that the 4% rule should rather be used as a guideline for financial planning and that where actual spending is concerned, a flexible approach is more sensible.
Timestamps:
0:00 Intro
2:45 Comprehensive Overview The 4% Rule
4:49 What is the 4% rule?
9:35 Issues surrounding studies on the 4% Rule
13:19 Are things different today?
15:27 The importance of flexibility in retirement spending
21:06 Variable spending strategies in retirement
34:22 The 4% rule in the FIRE community
41:02 Longer withdrawal periods
46:04 The 4.5% Rule & Small Cap Value Stocks with safer withdrawal rate
51:56 Safe withdrawal rate & CAPE
56:31 Conclusion
Links From Today’s Episode:
Rational Reminder on iTunes — itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — rationalreminder.ca
Shop Merch - shop.rationalreminder.ca
Join the Community - community.rationalreminder.ca
Follow us on Twitter - twitter.com/RationalRemind
Follow us on Instagram - @rationalreminder
Benjamin on Twitter — twitter.com/benjaminwfelix
Cameron on Twitter — twitter.com/CameronPassmore
Episode 135: William Bengen: The 5% Rule for Retirement Spending — rationalreminder.ca/podcast/135
Episode 89: Wade Pfau: A Sensible Approach to Retirement Income Planning — rationalreminder.ca/podcast/89
Episode 104: Fred Vettese: A Complete Guide to Retirement Income — rationalreminder.ca/podcast/104
Episode 112: Michael Kitces on Retirement Research and the Business of Financial Advice — rationalreminder.ca/podcast/112
Episode 95: Scott Rieckens (Playing with FIRE): Finding Financial Education, Perspective, and Freedom — rationalreminder.ca/podcast/95
