Quote:
Originally Posted by Russ_Boston
I thought more of something like this:
Start with 4%
If the earnings for that year are 10% then put 6% in another fund and use the 4%
If the earnings are less than 4% then take money from the reserve fund to equal 4%
Hopefully your reserve will build enough to use it as a 'splurge' account at some point while your nest egg remains safe.
I guess in the end it's just as easy to take the 4%  |
Yes, you have the general idea. And the 4% is designed to be very safe so you could actually end up with more assets when you die than when you started retirement. However if you move up to 6% you have a big risk that you could run out of money. But in your example, if the nest egg is increasing you might want to spent a little more in some years. But remember bad investment periods of 10 years are not out of the question. Just look at what interest rates are paying now.