58 Replies to “What Is The 4% Rule? How Much Money Do I Need To Retire?”

  1. A couple of points:
    – This theory is based on a study done using historical data. So it assumes that history will repeat itself, which it doesn’t.
    – This period (1900 – 2009) includes the greatest debt fuelled stock & bond boom in known history (1980-2000); which is about to crash again.
    – I’ll bet that it also doesn’t take into account the true rate of inflation, rather than the official rate.
    – There’s no mention of gold, the best performing asset class since 2000.
    – No mention of investing in productive businesses rather than stocks & bonds. ……

  2. Thank you for the video Phil! Really well done. Your videos are great; succinctly and clearly explained with awesome visuals. Definitely keep up the good work! I too am a big fan of MMM and a recent subscriber.
    Can I ask you about a good specific investment break down to live out this 4% rule? I invested money into a US Index fund in 2014 (Not Vanguard but through my Canadian bank with slightly higher fees) with snp500 as benchmark. After two years it seems like I’m just around even on that. Should i also have had an equal amount invested in bonds? With 50/50 bonds and stocks would the 4% rule have been achievable over the past 2 years? Maybe I should have also had some other indexes such as European or Canadian or Asian along side the US?
    Thank you for your work and time! Cheers.

  3. Retired in an unlucky year?

    What a crock!

    Here is some good finical advice “Don’t retire in an unlucky year!”

    How do you tell if it is an unlucky year?

    Sacrifice a chicken and roll the dice!

    1. An unlucky year would have been 2008 crash. Many elderly stockholders panicked and sold their stocks thinking they were going to zero. Others could not retire and had to keep working after the 2008 crash.

    1. Seriously man, start as early as possible. I’m 20 now and that makes nothing better. If you wait, you will regret it when you will be older. Do it now.

    2. If you invest early, the return you make on your investment will make you more money and it will keep snowballing. Just keep slowly adding to it. In Canada, a ‘tax free savings account’ can be opened at 18 and allows you to put $5500 a year in on average which accumulates over time even if you didn’t put that amount in. But if you start early, the investment return will make it so that you’ll be able to have more money in that investment account than anyone else your age because of the returns of your early investments growing in your account. So in Canada, start investing as soon as you hit 18.

    1. @ Sunil J: Hey I thought you “retired” – does that include working on the 3rd as well? If you are not sure, read your own post and stop this bullshit. Lies upon lies – you are already sounding ridiculous. Your fake gospel is just a pile of bullshit!

    2. Ravi Putcha that’s exactly my dream too, spend my life playing with my hobbies. What’s wrong with that? Good for you if you like working for the man or running a business.

  4. While I think this 4% (or 3%) rule has a lot of logic, this can’t be applied directly to everybody. In many countries/territories, you will have to pay taxes on the money you withdraw form your savings. The are a lot of different governemental programs and it probably is different everywhere, but, to continue with your 40000$/year expenses for a family; in order to have 40000$ cash (ready to be spent), the family will have to withdraw more (and in many places a lot more).

    Sure, as you said, those countries/territories would probably also have retirement plans for their retired people which would provide a certain amount of money troughout the year that you didn’t take into account and that will probably counter balance a part of the taxes you’ll have to pay, but probably not everything depending on your situation.

    Basically, I think this video is good to demonstrate that it’s not so hard to calculate what you’d really need to retire. Just wanted to clarify that this 4% rule will not apply to everybody everywhere, and that it also doesn’t allow for any extra expense unless you have an annual budget for ”extra” taken into account.

  5. Really liked your video. Great explanation and details on inflation. I’m personally planning on a 3.3% (30x) rule for myself.

    Great job putting this together and giving a shout out to MMM and Mad Fientist. How close are you to FI?

    1. Thanks for the positive comment! My partner just “retired” this year (she’s 43), and seeing her do it has me excited to get there…..even though I still enjoy my work. I have about 5-7 years to go according to my figures. Started following MMM about 6 years ago, and while I never felt I could take the concept to the “extremes” he has, slowly I have been changing my ways and building wealth in the process…..

  6. I retired this year at 58. I won’t even tap into my holdings. I will be reinvesting still, for quite a few years. I live in Europe, get an American pension, and will work just a little bit. I firmly believe in living below your means…..if you can

    1. i am not interesting in recreating what Fleck has achieved, i simply want to know how he went about purchasing property in Europe and if he used financing from an american institution.

    2. Fleck Smugbrother

      I want to retire when I die. Progression until death…if you shoot only for retirement then you are not living a fufilling life. That being said, you should always have the funds to live for life times.

    1. I actually retired at 25. No jokes.
      80%++ savings rate.

      4% savings rule is the jam.

      We are all Financially free until we leave home I guess but not financially independent as you rely on the parents 😉 😛

    2. TenthYoung funny joke. But truly, if you are born wealthy or as a trust fund baby you can be born financially independent. For the rest of us the 4% SWR is the secret to freedom in our 20s and 30s.

    1. Kudos for the Video! Excuse me for the intrusion, I would love your thoughts. Have you researched – Schallingora Brain Reconstruction Scheme (Sure I saw it on Google)? It is a great one off product for learning how to acquire the mind of a millionaire minus the headache. Ive heard some awesome things about it and my best friend Jordan at very last got great success with it.

  7. it’s good to plan for the future but don’t get addicted to it, at least live a little today.
    anything can happen, health issue, death,

  8. There is simpler way if you can afford it.
    Buy properties where the population is still growing, rent them as income. Keep renting them and hold these properties until you decide to quit being landlord. Maybe at age 75 or so.
    Sell the properties, invest the proceed in blue chips dividend stocks or bonds.
    Inflation will incrase your property value till the time you decide to sell them
    Dividends and bonds coupon will support your monthly living cost.

    1. Andy Pagakis I agree, that is why I said “if you can afford it” and definately not for everyone. Your 1st investment property (which is usually your second property-since your first property is for living) will drain you! But if you keep on doing it right, after the rent income coming in from your several properties, your 4th or 5th property will become very affordable (assuming there is no huge spike or crash in property price in very short time).
      I am lucky that I have been able to do it. The rent will support my living cost. The capital gains accumulating until my retirement year will be the long term “timed deposit”. Reaching retirement years most of them can be sold and I’ll switch to fixed income papers like blue chip investment stocks and invt grade corp bonds for my living cost.

    2. taxol2

      More smart to invest money into other companies making more money. Rental properties is an portfolio option, but more of a physical one. Takes continuation of maintenance and
      customer service…. depending. It can be a bigger risk than stock market. Stocks for the majority always go up with time if you do your research. I just think investments have more gains if you become good at it.

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