A pervasive belief is that if you withdraw no more than 4 percent per year from your retirement funds, your money will last for your lifetime.
"The 4 percent rule sounds logical on the surface," says Pete D'Arruda, president of Capital Financial Advisory Group in Cary, N.C. "Still, there are two glaring issues with this theory. First is market volatility, which has battered retirement portfolios several times during the last decade. The other issue, inflation, is the silent force that erodes purchasing power year after year."
Many financial planners agree those highly variable factors render such rules of thumb unreliable.