Experts say the 4% rule, a popular retirement income strategy, is outdated - CNBC
Though the reduction may sound small, it can have a big impact on retirees' standard of living.
Low inflation, low bond yields and strong stock returns have helped buoy investment portfolios and safe withdrawal rates, she said.Bonds are "highly unlikely to enjoy strong gains over the next 30 years," and high stock prices are likely to fall as they revert to the average, according to the report. The analysis concedes that this result is likely though not inevitable.
Further, the rule of thumb uses conservative assumptions. For example, it uses a 90% probability that seniors won't run out of money over a 30-year retirement. Retirees have a few options in this regard to ensure the longevity of their investments, according to Morningstar. Generally, these call for lesser withdrawals after years of negative portfolio returns.
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