Turns out most of us misunderstand it.
So much of personal finance and early retirement #literature is predicated on the 4% safe withdrawal rate that it’s easy to forget that the “rule” was discovered in the 1990s by the original Freak in the Spreadsheets, Bill Bengen.
And man, the financial media loves to splash sensational headlines about the 4% rule all over the place (“The founder of the 4% rule just changed it!”). You know the kind.
But there are a lot of misconceptions about the 4% rule, including the recent criticisms that it’s no longer valid. If you ever want to retire, this episode is a must-listen.
I welcomed Brian Feroldi onto the show to talk about the underlying assumption that makes the 4% rule work—over time, the stock market generally goes up. Brian's new book (aptly named Why Does the Stock Market Go Up?) is out now.