The 4% Rule: What Your Financial Advisor Isn’t Telling You About Retirement Withdrawals

Here’s a scary thought: What if one of the most basic rules of retirement planning – the rule that millions of people are betting their future on – is fundamentally flawed? That’s exactly what Todd Tresidder, a former hedge fund manager turned financial educator, reveals in his eye-opening book about retirement withdrawals.

Meet Todd: The Guy Who Retired at 35

Before we dive in, let’s talk about why you should listen to Todd. He’s not your typical financial author. After managing hedge funds and retiring at the ridiculously young age of 35, he could have just kicked back and enjoyed life. Instead, he noticed something troubling: most retirement advice was dangerously oversimplified. That observation led him to write “The 4% Rule and Safe Withdrawal Rates in Retirement.”

Why This Matters Now More Than Ever

Think about this: interest rates are at historic lows, the stock market has been hitting record highs, and people are living longer than ever. Your grandparents’ retirement rules? They might not work anymore. And if you’re counting on the famous 4% rule, you might want to grab a cup of coffee and keep reading.

The 4% Rule: Not What You Think

You’ve probably heard of the 4% rule. It’s retirement planning 101: Just withdraw 4% of your savings each year, adjust for inflation, and you’ll never run out of money. Simple, right?

Here’s the bombshell: Tresidder’s research shows that safe withdrawal rates throughout history have actually varied from as low as 1.86% to as high as 24.86%. That’s not a typo – we’re talking about a massive difference that could mean the difference between living comfortably and running out of money.

Let me share three real stories from the book that will blow your mind:

The Lucky 1921 Retiree

Imagine retiring in 1921. Markets were cheap, interest rates were good, and the economy was about to boom. These folks could safely withdraw over 10% of their savings each year. They had it made!

The Unlucky 1966 Retiree

Now, fast forward to 1966. Different story entirely. These retirees could only safely withdraw 3.53%. Why? They got hit with a triple whammy: high market prices when they retired, nasty inflation that wouldn’t quit, and poor investment returns. Ouch.

Today’s Retiree

Here’s where it gets really interesting (and a bit scary). Tresidder suggests that someone retiring in recent years might need to stick to just 1.8% to be truly safe. That’s less than half of what the famous 4% rule suggests!

Why Such Huge Differences?

It all comes down to three big factors that nobody talks about enough:

Market Prices When You Retire

Think of it like buying a house. Would you rather buy when prices are sky-high or when they’re reasonable? Same thing with retirement. Starting retirement when markets are expensive (like they are now) means you might need to be more conservative with your withdrawals.

The Lucky (or Unlucky) Sequence of Returns

Here’s something wild: two people can get the same average investment returns over 30 years, but one might be able to withdraw 24.86% while the other has to stick to 1.86%. The only difference? Whether the good returns came early or late in retirement. It’s like a twisted lottery!

The Silent Killer: Inflation

Remember those 1966 retirees? Inflation forced them to more than double their withdrawals just to buy the same stuff. Meanwhile, their investments weren’t keeping up. Talk about being stuck between a rock and a hard place!

A Better Way: Tresidder’s Three-Step Strategy

Instead of blindly following the 4% rule, here’s what Tresidder suggests:

1. Plan Like You’ll Live Forever (Well, Almost)

Okay, not forever, but plan for 100+ years. Sounds crazy? Consider this: medical advances keep extending lifespans, and running out of money at 90 isn’t exactly a great retirement plan.

2. Be a Market Detective

Before deciding how much to withdraw, look at:

• Are stocks expensive or cheap? (P/E ratios tell you this)
• What are interest rates doing?
• What’s happening with inflation?

If markets look expensive, maybe move some money into inflation-protected investments or dividend-paying stocks. It’s like having a backup plan for your backup plan.

3. Stay Flexible (Really Flexible)

This is probably the most important part. Don’t be rigid about withdrawals. Had a bad year in the markets? Maybe skip the inflation adjustment or withdraw a bit less. Good years? You might be able to spend a little more.

Making It Work in Real Life

Here’s where the rubber meets the road. To put Tresidder’s ideas into practice:

Watch Your Costs

Investment fees matter – a lot. If you’re paying 1% or more in fees, that’s money you can’t spend in retirement.

Build in Safety Margins

Having some cash set aside for market downturns means you won’t have to sell investments when prices are low.

Stay Alert

Having some cash set aside for market downturns means you won’t have to sell investments when prices are low.

The Bottom Line

The 4% rule isn’t exactly wrong – it’s just way too simple for today’s world. Retirement planning needs to be more flexible and sophisticated than a one-size-fits-all rule from the past.

Remember, you spent decades building your nest egg. Don’t let oversimplified rules put it at risk. Your future self will thank you for taking the time to get this right.

Want to dive deeper into this stuff? Grab a copy of Tresidder’s book. It’s available in Kindle formats, and it could literally save your retirement.

📚 Get “The 4% Rule and Safe Withdrawal Rates in Retirement”. on Amazon

When you purchase through this link, you support our work at no additional cost to you. We only recommend books we believe will genuinely help you on your wealth-building journey.

About Todd

Todd Tresidder’s work shows up in places like The Wall Street Journal and Smart Money Magazine. After retiring early from his hedge fund career, he’s dedicated himself to teaching others about smart money management through his website, FinancialMentor.com. He’s living proof that these strategies work – and he wants to help you make them work too.

Building Wealth the Millionaire Next Door Way: A Fresh Look at Time-Tested Wisdom

When Thomas J. Stanley first wrote “The Millionaire Next Door” in 1996, he revealed a surprising truth: most millionaires aren’t driving fancy cars or living in mansions. Now, his daughter Sarah Stanley Fallaw has updated these insights for today’s world in “The Next Millionaire Next Door.” Their research shows that despite changes in technology and the economy, the fundamental path to wealth remains the same – and it’s accessible to ordinary people willing to follow certain principles.

The book challenges what most of us think about millionaires. Looking at data from nearly 1,000 millionaires, they found that the median net worth is $3.5 million. Yet these wealthy individuals aren’t who you might expect. Most are in their early 60s, married, and live surprisingly modest lives. Nearly half drive Toyotas, Hondas, or Fords, not luxury cars. The median price they paid for their most recent car? Just $35,000.

The research shatters common myths about wealth. Perhaps most surprisingly, 86% of these millionaires didn’t inherit their wealth – they built it themselves. Even more interesting, having a high income doesn’t guarantee wealth. The authors found many high-earning professionals who weren’t wealthy because they spent most of what they made.

Take Ken’s story, which the book uses to illustrate these principles. Early in his career, Ken made a crucial decision. While his colleagues stayed in expensive Manhattan apartments, he convinced his boss to let him work from Atlanta. There, he bought a modest $300,000 house – the same house he still lives in 30 years later. This one decision allowed him to save and invest significantly more than his peers. Ken retired as a decamillionaire at age 55.

The book identifies clear patterns among these self-made millionaires. They’re disciplined about money – 70% know exactly what they spend on food, clothing, and shelter. They invest consistently but carefully. Many took more investment risks early in their careers (55% described their early investment strategy as “risky” or “very risky”), but became more conservative over time (only 17% maintain high-risk strategies later in life).

Family influence plays a significant role. Seventy percent of millionaires reported their parents were very frugal. However, the book emphasizes that you can build wealth even without this advantage. They share the story of Allison Lamar, who grew up with an alcoholic mother but learned financial responsibility from her grandparents. By age 54, she had built a $2 million net worth through disciplined saving and investing.

The authors stress that marriage choices matter significantly. An impressive 93% of millionaires are married or remarried, with most citing their spouse as crucial to their success. They choose partners who share their financial values and work together toward common goals.

What’s particularly relevant for today’s readers is how these principles apply in our modern world. Despite new challenges like social media pressure to spend and rising education costs, the core behaviors that build wealth haven’t changed. The book shows how successful wealth-builders resist these pressures by maintaining focus on their long-term goals.

Consider the Jacobson family, profiled in the book. They live in a 1,900-square-foot home – well below the American average of 2,400 square feet. Mrs. Jacobson makes her kids order from the dollar menu at restaurants. Yet they’ve accumulated significant wealth through consistent saving and investing. Their story demonstrates that living below your means doesn’t mean living poorly – it means prioritizing financial independence over showing wealth.

The book emphasizes that building wealth isn’t just about saving – it’s also about making smart career choices. Many millionaires are business owners or have side businesses. Others chose careers with good income potential and then lived well below their means to save and invest the difference. The authors share stories of teachers, engineers, and small business owners who built wealth through patient, disciplined financial management.

Investment strategy is another key focus. Most millionaires aren’t making exotic investments or trying to time the market. Instead, they invest consistently in traditional assets like retirement accounts, stocks, and real estate. The book shows that 60% of millionaires have 30% or more of their wealth in retirement accounts, demonstrating the power of consistent, long-term investing.

Perhaps most importantly, the book shows that becoming wealthy isn’t about luck or special talent – it’s about behavior patterns. These millionaires make rational, research-based decisions rather than emotional ones. They resist social pressure to spend and stay focused on their long-term goals. They take responsibility for their financial decisions and learn continuously about money management.

The authors conclude that the path to wealth remains open to ordinary people willing to follow these principles. It requires living below your means, making informed decisions, and maintaining discipline over time. While the journey isn’t always easy, the reward is true financial independence – having options and security rather than just the appearance of wealth.

This updated look at millionaire behavior proves that despite our changing world, the fundamental principles of building wealth remain the same. It’s not about looking rich or making flashy investments – it’s about consistent, disciplined financial habits maintained over time. The book offers hope that anyone willing to follow these principles can work toward financial independence, regardless of their starting point or current income level.

For readers seeking financial independence, “The Next Millionaire Next Door” provides both inspiration and practical guidance. It shows that becoming wealthy is more about behavior than income, more about patience than luck, and more about discipline than talent. In a world of get-rich-quick schemes and social media lifestyles, this message is more important than ever.

Key Takeaways:

• Building wealth is about behavior, not income
• Living below your means is crucial for long-term success
• Start investing early – take more risks when young
• Choose a spouse with similar financial values
• Focus on long-term wealth building, not appearing wealthy
• Make research-based decisions, not emotional ones
• Resist social pressure to spend
• Financial independence is more valuable than status symbols

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Ready to Start Your Journey to Financial Independence?

If you’re inspired to learn more about building wealth the millionaire next door way, you can get your own copy of “The Next Millionaire Next Door” here:

📚 Get “The Next Millionaire Next Door” on Amazon

Available formats:

• Hardcover – Perfect for note-taking and highlighting key insights
• Kindle eBook – Start reading instantly on any device
• Audiobook – Learn while commuting or exercising (free with Audible trial)

When you purchase through this link, you support our work at no additional cost to you. We only recommend books we believe will genuinely help you on your wealth-building journey.

About the Authors

Thomas J. Stanley (1944-2015) was a pioneering researcher who spent over 40 years studying the habits of wealthy Americans. His groundbreaking book “The Millionaire Next Door” (1996) sold over 5 million copies and changed how we think about wealth in America. With a PhD in business administration, he taught at the University at Albany, State University of New York, and was later a professor of marketing at Georgia State University.

Sarah Stanley Fallaw, PhD, follows in her father’s footsteps as a researcher of wealth and financial behavior. As the founder and president of DataPoints, she applies the science of behavioral assessment to help individuals build wealth. With a background in industrial psychology, she brings a fresh perspective to understanding how ordinary people can build extraordinary wealth in today’s economic environment.

Together, their work in “The Next Millionaire Next Door” combines decades of research expertise with modern behavioral science to show how the path to wealth remains accessible to ordinary people, even in today’s changing economy.

Exploring Ethereum Betting

Imagine a world where you could place bets without worrying about shady bookies, rigged games, or your winnings getting lost in the system. Sounds too good to be true, right? Well, thanks to Ethereum and blockchain technology, this dream is becoming a reality for online gamblers around the globe.

The New Kid on the Block(chain)

You’ve probably heard of Bitcoin, but Ethereum is like its cooler, more versatile cousin. It’s not just digital money; it’s a whole platform that lets developers create all sorts of applications, including online betting sites. Think of it as the Swiss Army knife of cryptocurrencies.

Why Gamblers are Falling in Love with Ethereum

No More Smoke and Mirrors

Remember that uneasy feeling when you’re not sure if an online casino is playing fair? With Ethereum betting sites, every spin, every card dealt, and every bet placed is recorded on a public ledger. It’s like having a transparent casino where you can see through the walls – no more wondering if the house is really playing fair.

Fort Knox-Level Security

Hackers drooling over your winnings? Not on Ethereum’s watch. Its decentralized nature means there’s no single point of failure. It’s like having your money in a thousand different banks at once – good luck trying to rob that!

Goodbye to “Processing” Limbo

We’ve all been there – waiting days for our winnings to hit our bank account. With Ethereum, you can say goodbye to that nail-biting wait. Transactions are faster than traditional methods, meaning you could be spending your winnings before the dust settles on your last bet.

But It’s Not All Sunshine and Rainbows

Source from: ycharts

The Need for Speed (and Lower Fees)

Here’s where things get a bit sticky. Ethereum, for all its glory, can be as slow as molasses sometimes. Imagine trying to place a last-minute bet, only to have your transaction stuck in digital traffic. And don’t get me started on the fees – during busy times, you might end up paying more in transaction fees than your actual bet!

Enter the Hero: Polymarket and Its Layer 2 Sidekick

Just when you thought all hope was lost, in swoops Polymarket with its secret weapon: Polygon. Think of Polygon as a express lane for Ethereum transactions. It’s like Ethereum, but on steroids – faster, cheaper, and more efficient.

Source from: https://pixelplex.io/blog/polygon-vs-ethereum-for-dapps/

Polymarket: Betting at the Speed of Light

By using Polygon, Polymarket has basically strapped a rocket to Ethereum’s back. Bets are processed faster than you can say “jackpot,” and the fees are so low, you won’t have to break open your piggy bank to place a wager.

The Future of Betting: Fast, Fair, and Fun

As blockchain technology keeps evolving, the world of online gambling is set for a major shake-up. Ethereum betting sites, especially those using clever solutions like Polygon, are paving the way for a future where betting is not just a game of chance, but a fair and transparent experience for all. So, next time you’re feeling lucky, why not give Ethereum betting a shot? Just remember, while the technology might be revolutionary, the old saying still holds true – gamble responsibly, and never bet more than you can afford to lose.Who knows? With Ethereum on your side, you might just hit the jackpot in more ways than one. Happy betting, and may the odds be ever in your favor!