US. IRI Expert Weighs in On Morningstar Update to 4% Rule
A recent paper from Morningstar Research that questions the decades-old “4% rule” for safely withdrawing funds from retirement accounts—and says 3.3% is the new 4%—has raised plenty of eyebrows in the retirement planning community.
One of the latest to comment about it is Frank O’Connor, Vice President, Research and Outreach for the Insured Retirement Institute (IRI), who notes the research also found that including protected income via annuities can help retirees meet their income needs.
“Outliving retirement savings is a major concern for America’s workers and retirees,” O’Connor said. “This latest study by Morningstar summarizes several key points and concerns about current market conditions that may affect how long retirees can generate sufficient income to last throughout retirement.”
The “4% rule” was proposed by William Bengen in a 1994 paper, “Determining Withdrawal Rates Using Historical Data.” It is a guideline to determine a withdrawal rate that would theoretically provide sustainable income without depleting assets entirely over a 30-year retirement.
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