People invest with all sorts of goals in mind: paying for their kids' college tuition, getting together the down payment for a house, achieving wealth or financial independence. But topping that list is no doubt building a nest egg they can live on in retirement. For purposes like the first two, the "spending" math in some respects can be relatively simple. But when it comes to your retirement portfolio, it's not. The key question is this: How much of your assets can you safely withdraw and spend each year and still feel secure about not going broke before you go? And among the more well-known answers, first promulgated by financial advisor Bill Bengen, is 4%. But just because it's a popular answer doesn't mean it's always the right one.
For this Motley Fool Answers episode, co-hosts Alison Southwick and Robert Brokamp have invited retirement finance expert Dr. Wade Pfau to talk about the pros and cons of the 4% rule, as well as five key assumptions that Bengen made when he calculated it -- and why they don't always apply. But first, it's a "What's Up, Allison?" segment about one of the lesser-discussed aspects of the college admissions bribery scandal: Those parents were committing crimes on behalf of kids who are unlikely to get any more benefit from going to an elite, prestigious school than they'd have gotten from University of Pick-a-State or Generic Mid-Tier Liberal Arts College.
A full transcript follows the video.
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