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Bill Bengen, the creator of the 4% rule, joins us to revisit one of the most important ideas in financial planning and retirement research. In this conversation, he explains the origins of the 4% rule, how his thinking has evolved over 30 years, and why he now believes retirees can safely withdraw closer to 4.7% — or even more — under certain conditions. We explore the data behind his findings, how to think about inflation, valuations, longevity, and sequence of returns risk, and the philosophy of living well in retirement.
Topics covered:
- The origins and evolution of the 4% rule
- How Bill discovered the worst-case retirement scenario (1968)
- The role of inflation and market valuations in withdrawal rates
- Why he now recommends 65% equities instead of 55%
- How diversification increases sustainable withdrawals
- The logic behind a U-shaped equity glide path
- Sequence of returns risk and how to mitigate it
- Thoughts on the permanent portfolio and gold
- Bucket strategies and cash reserves
- Dynamic vs. fixed withdrawal methods
- How longevity and FIRE affect planning horizons
- Why retirees should spend and enjoy more
- The philosophy behind “A Richer Retirement”
Timestamps:00:00 The origins of the 4% rule03:00 The 1968 retirement “buzz saw” scenario07:00 Common misconceptions about the 4% rule10:00 Inflation and valuation adjustments13:00 Diversification and higher withdrawal rates15:00 Longevity, FIRE, and extended retirements16:00 The U-shaped equity glide path18:00 Rebalancing and allocation timing19:00 The permanent portfolio and gold20:00 Sequence of returns risk explained22:00 Cash reserves and bucket strategies23:00 Dynamic withdrawal approaches24:00 Why the rule is now closer to 4.7%27:00 The changing market environment29:00 Key charts and frameworks from the book31:00 The eight essential elements of planning33:00 Withdrawal strategies and asset allocation34:00 Required minimum distributions36:00 Reflections on creating the 4% rule38:00 Bill’s philosophy on life and retirement40:00 Closing thoughts and where to find his book
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