Notes for BiggerPockets Money Podcast 120
Guest: Michael Kitces
Audio time: 1 hr 23 min
Read time: 2 min

One Line Summary

The 4% rule still works in times of recession because it was modeled for the worst-case scenario over years of historical data, including 3 of the biggest financial crashes in the last century.

Origin of the 4% rule

• In the past, 7-8% withdrawal rate was considered “conservative”
• In 1994, Bill Bengen saw that 7% worked on average but might not account for bad years (recessions)
  • Analyzed historical data and found that a 4% withdrawal rate covers most worst-case scenarios
• 4% is the one rate that worked in the worst historical market sequence