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Do you worry about out living your -- next day.
Nest egg that as our next guest says the tried and true metric for managing withdrawals of 4% -- Could -- many high and dry in their golden years morningstar's head of retirement research David Blanchett joins me now with his new report.
I did before you get to it.
I just wanna set up the issue here so the -- -- son is that I can only take out 4% each and every year.
When you go into retirement you say that rule is backfiring on retirees -- been questioned by a lot of Smart people.
But you wanna state your case and I want -- do that today why is the 4% rule backfiring.
We will -- percent rule was was built on this notion of kind of long term averages so.
There's research going back twenties among those years looking at what is a safe withdrawal rates and the problem is as you can't by the long term average to.
I'm if you wanna go and buy government -- -- quite right now -- -- marriage.
Well you you can't over thirty years but that the problem is is that is that when you first retire.
That's kind of the most important for -- long term success and so today if you buy government bond yielding 2%.
That's a lot lower than long term average of five and a half percent so the impact that has over twenty or thirty years is material.
For a retiree right now.
I think that's a great way to put it so you're saying that sure averages makes cents but at the end of the day what really matters is what you're doing with that next day.
At the moment you -- part of becomes critical and so many people found this out in the last few years -- the market tanked.
People know that that experience is real warning telling them now what should you do what is their right rate of withdraw.
Well I mean it's different for each person that the notion of 4% is based upon -- a married couple age 65 and you know I think that it for that same cohort 3% makes more sense but.
You know if if you're if you're 75 years old single you can take -- more than 4% you could take up five or 6% so each person is gonna be unique number.
Based upon a whole.
Set of factors.
So one size does not -- all in this case right.
But the -- Sorry David were at a time I apologize thanks for coming on I hope you'll come back soon and talk to us about retirement we'd love to have you back thank you so much.
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