Is the 4% Rule Still Viable?

With COVID-19 variants keeping retirement-ready consumers wondering what’s next for potential market volatility, many are reevaluating a once common rule of thumb for retirement:  the 4% rule. It held up well for many retirees in the past, but most fixed income financial products like bonds no longer yield anything close to the 4% that would be required to support withdrawals. With rates actually hovering around 0%, what is a viable strategy today? 

FIAs, or fixed index annuities, offer some advantages, especially given COVID-19’s impact on the market. When combined with a sensible systematic withdrawal plan, they can provide an alternative with the potential for upside return, via interest credits based on partial returns of market indexes. This may allow for a yield closer to 4% while still preserving some or all of the principal. Doug Wolff, President of Security Benefit is here today to discuss how FIAs could be a useful consideration for retirees amid today’s shifting markets.