You might have heard of the “4% rule.”
It’s a popular rule of thumb in financial planning circles. In a nutshell, it says that you can take annual distributions of 4% based on the value of your portfolio at the time you retire. You then adjust the payout for inflation in subsequent years.
It’s designed to be a “safe” number. You should be able to withdraw that amount over your retirement without depleting your nest egg.
But here’s the dirty little secret.
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