As a financial planner in the early 90s, William “Bill” Bengen confronted a question that still puzzles aspiring retirees today — “When I get to retirement, how much can I spend?”
For Bengen’s baby boomer clients at the time, there was little expert guidance on the subject.
Bengen decided to investigate himself by running numbers with a spreadsheet and a data book.
In October 1994, he published his findings in the Journal of Financial Planning, and what is now known as the 4% withdrawal rule for retirement was born.
Today’s investors still confront the same retirement withdrawal dilemma, with the added risk of inflation, which Bengen calls the “greatest enemy of retirees.” Bengen created the 4% rule during a stretch of relatively low, stable inflation.
