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Saving Your Nestegg When Your Wings Come Off

Traditionally, advisers have said a well-diversified retirement portfolio could throw off 4% per year in income in perpetuity; more recently, some firms have created more flexible models that let retirees take 8% or more. Catey Hill, a reporter with Smart Money, writes that now that’s in jeopardy, with some advisers recommending retirees take no more than 2% to 3%, less if they can help it. “A lot of the old rules go out the window,” says Jeff Seymour, managing director of Triangle Wealth Management in Cary, N. C.

Catey spoke with me about whether the 4% rule was dead.  I told her that not everyone is ditching the 4% rule.  “A large number of people can still use it and have a 90% confidence that they will not run out of money.” To get the best results, clients need a diversified portfolio (I recommend an equal mix of stocks, bonds and alternative investments like commodities and real estate), as well as both international and domestic stock and bond exposure.)  Read the entire article here.

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