Rethinking the 4% Rule: Is Your Retirement Income Strategy Leaving Money on the Table?

The 4% Rule: Is It Still Relevant?

If you're within 10 years of retirement, chances are you've heard of the 4% rule—a traditional strategy for drawing income from your nest egg. It’s been around for decades and is often considered the “safe” route.

But here’s the more important question:

Is the 4% rule really maximizing your retirement income?

Let’s explore.

What Is the 4% Rule?

The 4% rule suggests the following:

In retirement, withdraw 4% of your portfolio in year one, then increase the withdrawal each year to keep up with inflation. If you follow this plan, your money should last for 30 years.

For example, if you’ve saved $1,000,000, the rule says you can withdraw $40,000 in the first year, and gradually increase in the years after.

At first glance, it sounds reasonable. But when you dig deeper, especially in today’s economic climate, you might see things differently.

Let’s Do the Math

Try this quick calculation using your own numbers:

1. Take your projected retirement savings

2. Multiply by 4% to get your gross income

3. Multiply that number by 0.78 (assuming a 22% tax rate) to get your net income

If you have $1,000,000 saved:

• $1,000,000 x 4% = $40,000 gross income

• $40,000 x 0.78 = $31,200 net income

That’s around $2,600 per month.

Now ask yourself:

Is that the best your money can do? And are you confident it will last your entire life?

A Rule Designed for a Different Era

The 4% rule was created in the early 1990s, based on historical market performance and inflation assumptions that don’t necessarily reflect today’s retirement risks.

We live longer.
Markets are more volatile.
Healthcare is more expensive.
And the likelihood of rising taxes in the future is real.

Following a rule designed 30 years ago, without evaluating modern alternatives, could limit your retirement potential.

What If You Could Lock in 6–7% Income Payout for Life Without Market Risk?

At LegacyHaven Advisors, we help clients go beyond outdated rules by designing income strategies that:

• Provide contractually guaranteed lifetime income

• Eliminate exposure to market losses

• Offer higher income rates than the traditional 4% model

• Protect principal while maintaining access to growth potential

We utilize assets that are built specifically for today’s retirement landscape. Many of these solutions can allow for withdrawals of 6–7% of principal that is guaranteed for your lifetime. We prioritize income, but we also prioritize the principal that allows for the income by protecting against market volatility.

You’ve Done the Hard Part. Now Let’s Maximize What You’ve Built.

You’ve worked a lifetime to grow your nest egg. Now it’s time to make sure your income strategy is as smart, safe, and sustainable as your savings.

You don’t have to follow outdated rules. You can take control with a strategy that’s built around your needs, your goals, and your future.

Ready to See What’s Possible?

Schedule your free Retirement Income Review today.
We’ll walk you through your 4% scenario and then show you what else is possible.