4 Percent Retirement Rule Is Broken — Next up?

By Dave Copeland on January 10, 2018

For decades, the mantra of retirement advisers has been that people need to start saving early and often for a happy retirement.

But it’s only been in recent decades that they have turned their attention to how to best manage those savings once you’re no longer accumulating wealth and living off the proceeds of a life’s work.

The focus on making sure you don’t run out of money before you run out of years started in 1994, when William Bengen developed the “safe withdrawal rule,” more commonly known as the “4 percent rule.”

Editor’s note: Since that, a lot of folks have lived longer and ended up in virtual poverty because they had a problem using home equity to finish well. The HECM Reverse Mortgage was designed for that, and people in retirement mode should know that the thinkers believe you should use home equity to support early in retirement and complete the cycle using home equity resources. Fifty thousand American senior homeowners attest to their home equity support each year. More are expected to join that group as they grow older and wiser in retirement mode.

The “4% rule” doesn’t work.

It is our conclusion that home equity is fair game and should be used more often than it is. More economists and financial planners are dealing with reality. Americans are not carrying enough savings and pensions into retirement to cover the risk of running out of resources. More information on the home page under the “Information” tab.