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3 Things You Need to Know About The 4% Rule

February 21, 2018

From the Real Deal Retirement website

I have questions about the “maximum safe withdrawal rate,” or the 4% rule. If you’re withdrawing the money from an IRA, do you factor in your marginal tax rate to arrive at the 4% withdrawal? And how do you adjust withdrawals in reaction to strong or weak investment results?

The 4% rule is probably the best-known strategy for turning money in IRAs, 401(k)s and other retirement accounts into income you can count on for life. Despite all that’s been written about it over the years, however, many people still aren’t completely clear about how this rule works.

So I’m going to try to answer your question and explain the ins and outs of this withdrawal strategy by boiling it down to three essential points:

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