The Rational Reminder Podcast | The 2% (!?) Rule for Retirement Spending | Rational Reminder 229 @rationalreminder | Uploaded December 2022 | Updated October 2024, 8 hours ago.
Traditionally, people saving for retirement and financial advisors relied on the 4% rule when calculating how much to save for retirement and the associated income those savings would provide after retirement. What if you found out it does not work? Is there another option? Today, we offer you an alternative approach, which is the 2% rule for retirement spending. Before we delve into today’s main topic, we update listeners on the recent London meet-up, what to expect on upcoming shows, and who our special guest is to kick off the first episode of 2023. Then, we discuss today’s main topic and learn what the 2% rule is, how it compares to the 4% rule, and whether the safe percentage for retirement is actually higher. We unpack retirement spending through the lens of several empirical papers, historical data, and market comparisons. We also find out why the US market has always been able to bounce back from uncertainty and whether there is empirical data to support the 4% rule. We also talk about the many financial challenges and opportunities that young people face, the biggest mistake people make regarding retirement, the value of financial literacy, book reviews, and more!
Timestamps:
0:00 Intro
9:40 Main Topic: The 2% Rule for Retirement Spending
12:11 The 4% Rule
19:07 US Exceptionalism
28:18 Expanding the Sample
43:11 The 2.26% Rule
45:42 Considerations
48:27 Main Topic: Conclusion
50:08 Challenges and opportunities for young people today (high housing costs, rising interest rates…)
56:34 Solutions & Reasons to improve expected outcomes
1:02:03 1 Episode in 60 seconds
1:04:19 Book Review: The Elements Of Choice: Why The Way We Decide Matters
1:13:09 Aftershow
Participate in our Community Discussion about this Episode:
community.rationalreminder.ca/t/episode-229-the-2-rule-for-retirement-spending-discussion-thread/20473
Book From Today’s Episode:
The Elements of Choice: Why the Way We Decide Matters — amzn.to/3VvxZR8
Links From Today’s Episode can be found on: rationalreminder.ca/podcast/229
Traditionally, people saving for retirement and financial advisors relied on the 4% rule when calculating how much to save for retirement and the associated income those savings would provide after retirement. What if you found out it does not work? Is there another option? Today, we offer you an alternative approach, which is the 2% rule for retirement spending. Before we delve into today’s main topic, we update listeners on the recent London meet-up, what to expect on upcoming shows, and who our special guest is to kick off the first episode of 2023. Then, we discuss today’s main topic and learn what the 2% rule is, how it compares to the 4% rule, and whether the safe percentage for retirement is actually higher. We unpack retirement spending through the lens of several empirical papers, historical data, and market comparisons. We also find out why the US market has always been able to bounce back from uncertainty and whether there is empirical data to support the 4% rule. We also talk about the many financial challenges and opportunities that young people face, the biggest mistake people make regarding retirement, the value of financial literacy, book reviews, and more!
Timestamps:
0:00 Intro
9:40 Main Topic: The 2% Rule for Retirement Spending
12:11 The 4% Rule
19:07 US Exceptionalism
28:18 Expanding the Sample
43:11 The 2.26% Rule
45:42 Considerations
48:27 Main Topic: Conclusion
50:08 Challenges and opportunities for young people today (high housing costs, rising interest rates…)
56:34 Solutions & Reasons to improve expected outcomes
1:02:03 1 Episode in 60 seconds
1:04:19 Book Review: The Elements Of Choice: Why The Way We Decide Matters
1:13:09 Aftershow
Participate in our Community Discussion about this Episode:
community.rationalreminder.ca/t/episode-229-the-2-rule-for-retirement-spending-discussion-thread/20473
Book From Today’s Episode:
The Elements of Choice: Why the Way We Decide Matters — amzn.to/3VvxZR8
Links From Today’s Episode can be found on: rationalreminder.ca/podcast/229
