Retirement Income Toolbox

January 15, 2018

One common very common question that is asked to almost every Financial Advisor “How much can I take out of my retirement account and not run out of money?” seems to surface repetitiously.  Every Advisor and firm have their own opinion, research, and suggestions regarding this matter but I though I would share an article explaining where the basis of this concept comes from.

The following appeared in Investment Dec 18-22 2017 issue.

William Bengen “Father Of 4% Rule”

William Bengen, 70, former president of Bengen Financial Services and developer of the “4%” rule,” shows what can happen when you combine multivarious skills.

After more than 20 years with his family’s New Your-based 7 UP bottling plant, he read a magazine article about the new field of financial planning and decided that would be his next career.

Clients kept asking how much they could safely withdraw from retirement savings without funning out of money. Not finding the answer, Mr. Bengen combined his engineering training with his own spreadsheets and studied the data.

His findings were published in the Journal of Financial Planning in 1994 and caused a sensation.

The rule states that generally speaking, withdrawing 4% (now he estimates closer to 4.5%) the first year of retirement and increasing the annual amount based on inflation enables a portfolio to last 30 years or more.

“It surprised the hell out of me.  I started getting feedback from readers, getting invited to conferences.  It grew like topsy,” he said.

Now retired, Mr. Bengen focuses on family, community and more writing.  He's working on three projects at once: a work of fiction continued retirement investment research and a serial on American culture in the 1950s.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.