There are a lot of rules and strategies when it comes to investing and retirement; one of the most famous is the 4% rule. The metric on what constitutes a safe withdrawal rate from a portfolio when retiring has become the standard that many retirees live by. But in the age of low returns, long life spans, and interest rates kept close to zero, the rule has been thrown on its head.
Some market pundits have even called the amount “too dangerous” for retirees to follow. With that in mind, the rule has moved into the “don’t use” category for a variety of advisors and is considered taboo.
But should it be?
As with many of Wall Street’s adages and axioms, this time isn’t different. Investors looking at the 4% rule just need a different set of tools to make it happen. And guess what? Dividends are major part of that.