How does your retirement income planning solution compare to using a standard withdrawal rule like the 4% rule?

The most important thing to note is that our retirement income solution gives you a full strategy vs. just looking at one piece of creating a solid income plan. The 4% rule is just giving you a withdrawal metric and is not tailored to you.

The 4% rule is rigid. It is like a one-size fits all shoe: for some it fits, but for many it requires a shoehorn. Using it can be uncomfortable and awkward, and you might find it does not fit your lifestyle.

The 4% rule (or any standard withdrawal rule) is generic and is built on static assumptions that do not change over the years you are planning to withdraw assets from your retirement accounts. These assumptions don’t take into consideration key factors that change and can impact your retirement income plan and withdrawal plan. 

Specifically, the 4% rule does not allow for the variability in how most retirees actually spend. For example, retirees typically travel early in retirement, and less so as they age. Other spending habits change as well. According to a study by J.P. Morgan Asset Management, except for charitable giving and health care, most aspects of retirement spending actually decline over time.

With GuidedChoice, we have tailored our retirement income planning service to your needs and goals and to take into account multiple factors that change over time. You can plan for world trips or other significant expenditures in our tool, and solve for spending with those expenses taken into account. By understanding these factors along with your personal information, our tool applies our methodology to recommend a sustainable spending plan.

Our advice is most useful when we can update it each year for how your situation and savings have changed. When we advise you on spending each year, we also project the likelihood of your money lasting throughout your entire retirement if you implement our advice. Of course, there can be no guarantee that this will be the case.

Our stated average success rate of 90% using GuidedChoice compared to a 50% average success rate using the 4% rule reflects our estimation of the probability that your retirement assets will last beyond your lifetime. In order to create our recommended spending plans, we run thousands of Monte Carlo simulations of different spending levels and at different levels of portfolio risk. Any recommendation we make is estimated to have a 90% probability of success at the time it is made based on the information provided to us. Changes in circumstances can impact the estimated success rate, so we encourage you to update your information at least annually.

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