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Simplified Tax Planning: The 4% rule's structure makes it easier to plan taxes, especially when lump-sum withdrawals align with financial needs.
Full Market Participation: Investors benefit from participating fully in market growth, gaining exposure to high-flying stocks.
Easier Planning: Setting a target of 25 times annual expenses simplifies budgeting and financial projections.
Cons:
Sequence of Returns Risk: This method can expose retirees to financial risks during market downturns, potentially leading to necessary spending cuts.
Boom-and-Bust Lifestyle: Market performance heavily impacts retirement lifestyles, with fluctuations directly affecting the amount available for withdrawal.