The 4% Rule

Anyone who is in retirement or close to it knows what the "4% Rule" is referring to. If you don't know what this is and you are soon to retire or are retired, you should know. It refers to the amount of money that a person should be able to take from their total retirement fund to live on each year. For years, experts have said that taking 4% each year from your retirement savings, should be okay and should not present a problem of having enough money to live on in your retirement years. However, just recently, the experts are saying that the annual increase in the stock market is not enough to justify the 4% amount and now it should be closer to 2.8%. The advice they are giving to get by on that amount is to learn to live on less, work longer, or put your retirement funds into a different type of fund to earn more. However one chooses to do this, the fact remains that times are changing and what we had financially years ago, may not be the same in years to come. 

This presents many different challenges for the people in our society who either haven't saved any money or haven't saved enough, not to mention those who lost their life savings in the 2008 stock market plunge. We know several people who altogether pulled their money from the stock market and haven't reentered that means of retirement investing. Some of our friends are taking on part-time jobs just to get by. That is not what they had planned for their golden years, for sure. But, in order to live either at the same level of living or slightly above, most people are willing to take on whatever they have to to make ends meet. Some people also find it fulfilling to take a job that has more social contact. Thus, the many white-haired Walmart workers? I used to feel sorry for all the older folks I saw working at Walmart or Target or the local grocery store, but then I realized that some of them are doing it for a social outlet. We even see one guy who we have known for years who works the night shift stocking shelves at the local Walmart. When we have stopped by during the late evening hours (on our way home from a long distance jaunt of our own), we often see many older people working that shift towing pallets of merchandise to restock the shelves overnight. They seem to have a kind of camaraderie amongst themselves. I also often wonder how many of these older folks don’t sleep well anyway so figure they might as well make good use of the nighttime hours. 

Whether you have saved enough or not, it always pays to think ahead when it comes to your retirement years. We were not ones to have the money years ago to save much, but in time (once our kids grew older) we were able to start our savings plan. It is never too late. Of course it would be nice to be able to put that one lump sum away in your early years (20s or 30s) and let it sit and earn interest over the work years, but that is not always possible. Just remember though – it is never too late to start saving for your future. It is surprising how much compound interest plays a part in future funds. Be consistent. Be persistent. Be diligent. You will have a good life and be able to live nicely if you only plan ahead.
Living the life I want to live,
Becky