How Investment Fees Lower Retirement Spending (and invalidate the 4% Rule)

How Investment Fees Lower Retirement Spending (and invalidate the 4% Rule)

The 4% Rule of retirement spending is used to plan spending in retirement. The rule says you can spend 4% of your nest egg in the first year of retirement. In subsequent years you adjust the amount by the rate of and inflation. Following this approach gives you a ver good chance of not running out of money in retirement.

The 4% Rule, however, assumes no investment fees. Add even a small amount of fees and your spending in retirement must go down. Add 1% or more in fees, and retirement spending must go down a lot.

In this video, we look at just how investment fees lower how much you can spend in retirement. We look at fees ranging from 0.10% to 3%.

Study: https://www.advisorperspectives.com/articles/2020/11/19/how-investment-expenses-erode-safe-withdrawal-rates-1

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