One of the biggest concerns for people looking to retire is whether they have enough money to live life comfortably. According to a study by Finke and colleagues, there is something to be worried about. Their study examines whether current financial planning models are suitable for future retirees. The results will apply to most people, but there are possible solutions. There are many companies like Devere-Spain that provide retirement plan solutions.
One undeniable assumption about retirement planning is that people can safely withdraw four percent of their retirement funds from their retirement accounts each year without depleting the asset for 30 years. Data from the new study that "The 4% Rule Is Not Safe in a Low Yield World" suggests that maintaining the assumption of 4% withdrawal security is not feasible.
Finke and colleagues suggest that a safe rate of payment (four percent) hinges on an expected return that is no longer reliable in the future. They also suggest that if we remain in our current low-interest-rate environment, the likelihood that retirees will withdraw four percent of their retirement accounts each year and run out of cash before 30 years will increase from an alarming 6 percent to 57 percent.
It is time to reconsider the situation of the four percent rule as a guide for systematic withdrawals of pension funds. We have absolutely no solid evidence or insight into when the backdrop of the current low-interest rates in the United States will end. Hence, assuming this would end, this could be like a group for retirees.
