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One of the biggest axioms in all of retirement personal finance is the so-called 4% rule.

First created by financial planner William Bengen, the rule has become standard when looking at withdrawal rates from a retirement portfolio. In essence, investors can withdraw around 4% of their retirement portfolio a year and still have the ability to grow it.

And by in large, the rule has worked well in recent years as gains from the market have helped buoy low-interest rates.

But retirees may need more flexibility when it comes to the rule in upcoming years. Low-interest rates and a bear market will be hard for the average portfolio to generate enough of a return for investors. Flexibility is key.

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The 4% Still Holds, for Now

The basics of the 4% rule are pretty easy to understand. Citing a study by Harvard from the 1970s, Bengen’s research showed that, thanks to gains in the market, the average retiree should be able to comfortably live with 4% of their balance at the start of their retirement and slowly increase the amount each year to account for inflation. According to Bengen, even during bear markets no historical case existed that a 4% annual withdrawal would exhaust a retirement portfolio in less than 33 years.

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