(RepublicanDaily.org) – A financial specialist whose expertise is retirement spending is concerned for the future of American retirees. Bill Bengen, the inventor of the 4% rule, says inflation and other factors require a shift in spending. The last thing a retired person wants is to run out of money — and right now, rampant inflation could put a strain on the budget of those in retirement.
— Bourree Lam (@bourreelam) April 19, 2022
The 4% rule, created in 1989, laid a benchmark for retirees to ensure they’d have enough funds to last 30 years. By spending 4% of their retirement savings the first year and adjusting each year for inflation, 65-year-olds could comfortably assume to have enough to take them into their 90s. Adjustments to the rule follow current economic forecasts, but the goal remains the same: don’t let the well run dry.
The benchmark had an adjustment to 4.7% in a 2006 revision. The newest recommended number is 4.3% with inflation skyrocketing well over 8%. Bergen himself says he’s making the shift, according to the Wall Street Journal. The 2013 retiree says while he’s safe where he stands, he’s uncomfortable because he’s so early in his retirement. “The combination of threats we face could be damaging,” he added.
While cutting spending as prices skyrocket may seem like a difficult task, it might just be the most important thing those living on a tight budget can do to see their way through the current economic storm.
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