Is the 4% Rule broken?

Is the 4% Rule broken? -
Have you heard of the 4% Rule? This is the amount of money could be safely removed from an investment account without exhausting during the lifetime of the individual.
William H. Byrnes, Esq., And Robert Bloink, Esq., LL.M. recently wrote an article, "Are Annuities Old Rule 4% pension solution" in AdvisorOne in saying that for years, the rule of 4% provided the baseline from which the advisers determined strategies for retirement account withdrawals. The rule is simple, well trusted, and until recently, relatively little chance of failing. But the authors point out, in low interest rate environment of today, strategies that have worked over the past 20 years are simply not working, meaning that councilors and customers must create alternative solutions to provide a sustainable retirement income.
people who have traditionally sought aggressive investment returns and has not looked favorably on annuities can not ignore the evidence. New studies suggest that annuities are a competitive alternative to the old rule of 4%
The authors go on to say that :. the 4% rule suggests that if you withdraw 4% of a retirement account balance each year, you will be able to create a flow of sustainable retirement income with virtually no risk of exhausting the active accounts. This strategy has worked for years, more or less, but there has always been problems, such as failure to take account of the actual investment performance in a given year. It was generally a safe bet, however, that you will not be short of money, which is the biggest fear for many retirees.
With a low interest rate environment today, the 4% rule is no longer a safe bet. A study by Texas Tech professor and research magazine contributor Michael Finke shows that because interest rates are about 4% lower than the historical average, the failure rate expected for the 4% rule is past 6% to 57%, which means that if 4% assumption is used, your chance of running out of money before life expectancy is 57% of the time.
The authors add that study found that the failure rate would remain at 18% even if interest rates rise over time in five years, but there is no evidence to suggest that we go back to the interest rate of the 20th century soon, if ever. The bottom line. It is time to change the 4% withdrawal strategy
retirement accounts are not yielding the returns they have in the past, and the potential for a failure rate of 57 % following the 4% rule is something you should pay attention. annuity products may not look so attractive when the failure rate of 4% rule was 6%, but the current landscape puts rents in a new light. They should be seen as more attractive than ever because they can guarantee a lifetime income stream, no matter how long you live, and they should be part of planning your retirement income.
Contact your financial advisor for more information officer.