The 4% Rule: Is It Still the Key to Early Retirement in 2025?

Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

Ari Taublieb, CFP®, MBA

Real Estate Investing, Stock Investing, Careers, Save On Taxes, Retirement, Business, Personal Finance, Investing, How To Retire, Early Retirement, Retirement Planning, Entrepreneurship

4.7 • 583 Ratings

🗓️ 26 May 2025

⏱️ 19 minutes

🔗️ Recording | iTunes | RSS

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Summary

The 4% withdrawal rule does not apply to early retirees since it's based on a 30-year timeline, not the 40+ years needed for early retirement. Guyton's guardrails approach offers a better alternative, allowing for 5.2-5.6% withdrawal rates by adapting spending based on market performance. • Guardrails approach uses flexible withdrawal rates that increase when markets perform well and decrease during downturns • Traditional 4% rule based only on S&P 500 and intermediate US bonds, while di...

Transcript

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0:00.0	please stop relying on the 4% rule if you want to retire early it does not apply to you now what
0:05.9	i'm going to talk about today is a new approach now this was developed by someone named john guyton
0:11.5	who uses what's called guiten's guardrails approach this is what we use for our clients it's a whole
0:16.8	lot more applicable you can actually generate up to 5.2 to 5.6% of income from your portfolio,
0:24.1	meaning that's what you can withdraw. And it's designed to last for 40 plus years, not 30 years,
0:30.2	like the traditional 4% rule. So if you want to retire early one day or you're in retirement,
0:35.1	trying to understand how much income could I possibly support,
0:38.5	then you're in the right spot. These are the types of videos I love making. This is all I do
0:43.2	every day is early retirement planning. And I wanted to know when did this 4% rule really go
0:49.3	into effect? Why are people relying on this? And you can see here, Bill Bangen, William Bangen in 1994,
0:55.9	he started with this 4% rule. And if you invest your retirement nest egg in 50-50 of large-cap
1:03.0	stocks, so S&P 500, and intermediate term U.S. bonds, you can be rest assured you will not run
1:09.4	on money for 30 plus years. And this 4% is 4% of the total
1:14.9	in your first year of retirement. And then each year thereafter, you increase the number of dollars
1:20.1	you draw by the prior year's inflation rate. So the idea is how can you make your nest egg last for
1:26.6	30 years? That doesn't apply to a lot of you. A lot of you want to retire in your 40s or 50s or early 60s going, I want to retire early and what if I'm in good health? I don't want to run out of money when I'm 85 or 90 and I don't think you do. So that's what this episode is going to be all about. If you're listening on the podcast app, awesome.
1:45.4	If you're watching on YouTube, awesome.
1:47.8	I want to make sure that you digest this content in whichever form makes sense to you.
1:53.0	I will say today will be a little bit more number heavy.
1:55.8	So if you want, I encourage you to follow along on YouTube.
1:59.4	My name is Ari Taublieb.
2:02.2	I'm a certified financial planner.
	...

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