My Friend Could Have Retired But Fear About “The New 4% Rule” Has Them Sitting On Their Hands

One of the most interesting challenges with deciding when to retire is a timeless debate about whether or not you will run out of money before passing away. This is understandably a big concern for many people, especially those close to retirement, as this fear isn’t entirely unfounded as it has happened before and will […] The post My Friend Could Have Retired But Fear About “The New 4% Rule” Has Them Sitting On Their Hands appeared first on 24/7 Wall St..

Mar 16, 2025 - 14:49
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My Friend Could Have Retired But Fear About “The New 4% Rule” Has Them Sitting On Their Hands

One of the most interesting challenges with deciding when to retire is a timeless debate about whether or not you will run out of money before passing away. This is understandably a big concern for many people, especially those close to retirement, as this fear isn’t entirely unfounded as it has happened before and will happen again. 

Key Points

  • This Redditor is posting on behalf of a friend concerned about the current validity of the 4% rule.

  • The friend’s concern is that the 4% rule is no longer as applicable as it once was if you live well past 70.

  • It’s okay to be worried about making sure you don’t run out of money in retirement.

  • Over 4 Million Americans set to retire this year. If you’re one, don’t leave your future to chance. Speak with an advisor and learn if you’re ahead, or behind on your goals. Click here to get started. 

According to the CDC, the average life expectancy in America will be 77.5 years in 2025 and it’s for this reason one Redditor is trying to convince a friend approaching 70 that they should retire and stop worrying about money. Posting in r/ChubbyFIRE, there is a concern that the safe withdrawal rate could be higher than 4%.

Ultimately, millions of people will find themselves in this situation, and many will never be near FIRE numbers, but the same concern exists about knowing when it’s okay to stop working. 

The Big Concern

In this instance, the Redditor worries about their friend’s point-of-view as they approach 70. As previously mentioned, there is a legitimate concern that they will run out of money based on the 4% safe withdrawal rate. 

Part of the reasoning here is that the Redditor’s friend saw their parents live into their 90s, giving them a potential expectation that they could do the same. Combined with that is a general worry around inflation and the increasing cost of living. It’s really this that provides a good level of fear that their safe withdrawal rate would need to be more than 4%. 

Social Security has already been factored in, and as it won’t adjust the safe withdrawal rate, the Redditor is potentially back at square one with how to convince their friend of the best course of action. 

How To Help

There is no question that this is a tricky situation, and even with the 4% rule still mostly holding true, it doesn’t make this instance any less concerning. The general rule is that with a 4% safe withdrawal annually, around 90% of your money should last 30 years, but this isn’t always true. 

Understandably, the Redditor’s friend is concerned about whether or not inflation will drive their needs past the 4% recommendation. The reality is that at the age of 70, the 30-year rule would be just fine considering the likelihood that this friend will live to 100 is only 0.03%, according to Pew Research Center data in the United States. 

With all this said, the Reddit comment section recommends that this Redditor and friend explore the BrokeRichorDead calculator. Using this calculator, they can model and run any number of scenarios to see how much can be spent to ensure money will last over the next 20 or even 30 years. 

How To Make Money Last

Of course, the better scenario here to ensure money lasts is to talk with a financial advisor and build a sensible plan. Any good financial advisor can look at the Redditor’s friend’s portfolio and or holdings and help them model how much they can spend. They can also provide insight into new opportunities for earning more while retired. 

Setting aside the 4% rule, other ways exist to help money last while retired. Most importantly, this would include keeping any fixed expenses in check, as this friend shouldn’t be making any significant purchases. 

In addition, they could talk with a financial advisor about purchasing an annuity, which would guarantee them lifelong income with a buy-in now. They wouldn’t even have to buy a giant annuity with massive fees, just enough to cover all their bills. 

Something that isn’t mentioned here but needs to be, especially if there is a real possibility they can live into the 90s, is having a long-term care plan. Healthcare costs aren’t mentioned in the original poster’s comments, but this can be expensive and come on without notice. 

Perhaps most importantly, this Redditor must help convince their friend to be honest about how much they truly need to live. Are they overestimating their costs right now based on inflation fears? This is where the BrokeRichOrDead calculator will come in handy, so they can both visualize precisely how much is necessary to live for another few decades. 

 

 

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