The 4% Rule & Retirement | Preserve Wealth Management

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here are two of our favorites worth sharing.

Your Money

What is the 4% rule? Who came up with the 4% rule? And does it still apply to me?

The 4% rule is an oversimplified rule of thumb used to determine how much you could safely withdraw from your savings each year to last through retirement.

William Bengen, an MIT trained rocket scientist turned financial advisor, first articulated the 4% rule in 1994. He originally tried to name it the Safemax Rate but it didn't stick. It's unfortunate because Safemax is a little more accurate. His original work studied the maximum safe withdrawal rate one could have taken over historical markets and never run out of money. He came up with 4.15% and someone rounded it down to 4%. Again, that was worst case.

The study has been reexamined many, many times since then. Personally, I find the most interesting and powerful finding to be the inverse link between a safe withdrawal rate and stock market valuations. High valuations (similar to now) the rate is in the Safemax rate is closer to the original 4%. In trough valuations (like before a bull market), the Safemax rate was double-digits!

The original author of the study, Bill Bengen himself, continues to tinker with it, too. His latest work published last month concludes a new Safemax Rate of 4.5%. That's about a 10% increase which ain't too shabby.

Bill Bengen revisits the 4% Rule using Shiller's CAPE Ratio
by William Bengen

Your Life

More than 60 million Americans have voted so far—which has surpassed all 2016 early ballots cast, and there is still several days left until Election Day. Record-shattering turnout is expected in this year’s Presidential Election.

Participating in elections is one of the key freedoms of American life, giving people the opportunity to voice concerns, beliefs, and how they want to be represented. Many people in countries around the world do not have the same freedom, nor did many Americans in centuries past. It was not until the 15^th amendment was passed in 1869 that black men were allowed to vote. Women were denied the right to vote until 1920, when the long efforts of the women’s suffrage movement resulted in the 19th Amendment.

No matter what you believe or whom you support, it is important to exercise your rights. #Vote

Why voting is important

Complexity Simplified

Steve Ballmer is the retired chief executive of Microsoft. His latest philanthropic venture is USAFacts.org. It's a herculean effort to organize all the raw data the government publishes, from over 70 sources, so that folks can easily have fact-based discussions on where Federal money is spent and analyze the impact it made.

Visit the site and in just a few seconds you'll see how they turn complex information into simple subject graphs. Beware: you can easily fall down a rabbit hole and spend hours delving into a topic.

Trivia

A: Ethiopia
Q: Tennis star Serena Williams won which major tournament while pregnant with her first child?

Back in 1994, this song reached #1