Alternatives to the 4% rule for retirement income

01/19/2013 | AdvisorOne

The classic "4% rule" for retirement income does not work in a low-yield environment, according to a study by Michael Finke, Wade Pfau and David Blanchett. Annuities and taking a more conservative approach to retirement income are alternatives to seriously consider, but they can have downsides, as annuities reduce liquidity. "You either need to maintain more access to cash in the form of a lump sum you can always withdraw from if you need it or, if you annuitize, you make sure you can protect yourself by buying long-term care coverage," Finke said.

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