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#377: Today\u2019s episode is sheer retirement nerd bliss.\nWe talk to the creator of the 4 percent retirement safe withdrawal rule, Bill Bengen.\nIf you\u2019re new to retirement planning, you might not yet grasp the gravity of this. Let\u2019s cut to the chase: the 4 percent rule is one of the most revolutionary, groundbreaking insights in the field of retirement research in the past 30 years.\nTo understand why, let\u2019s climb in our time machines and return to 1994.\nBack then, many financial advisors were telling their clients that they could safely withdraw 7 percent of their retirement portfolio each year.\nAfter all, the simplistic logic went, the stock market has historically yielded between 7 to 9 percent returns, so that type of withdrawal rate shouldn\u2019t dwindle the principle \u2026 right? \u2800\nBill Bengen, an MIT graduate and former rocket scientist, decided to build a better model. He looked at the performance of investment portfolios across 30-year time horizons, beginning in 1926.\nUnder the assumption that the portfolio is invested 50 percent in an S&P 500 Index and 50 percent in intermediate-term bonds, in a tax deferred account, he found that retirees could only withdraw 4.2 percent of their portfolio in the first year of retirement, and that amount adjusted for inflation each subsequent year.\nHe called this the \u201csafe withdrawal rate\u201d that gave people a reasonable chance of not outliving their money, based on historic performance.\nHe published the results in the Journal of Financial Planning and caused a stir. This was revolutionary. It upended the assumptions that dominated the field at the time.\nAnd it remains a cornerstone of retirement planning to this day.\nWe talk to Bill Bengen about his discovery \u2013 and his latest research \u2013 in today\u2019s episode.\n\nFor more information, visit the show notes at https://affordanything.com/episode377\nLearn more about your ad choices. Visit podcastchoices.com/adchoices