Brokamp Says 5.5% Withdrawal Rule Can Beat 4% for Retirees Today

1 articles · Updated · The Motley Fool · Jun 6

5.5% is the withdrawal rate Bill Bengen now recommends for someone retiring today, Robert Brokamp said, arguing the long-used 4% rule may be too conservative and keep people working longer than necessary.
18.2 times annual spending—not 25 times—may be enough before Social Security, he said, while higher savings rates also cut the retirement target by forcing households to live on less.
A 35-year-old household saving 30% could retire at 57 versus 73 for one saving 10%, based on Brokamp’s example of two $250,000-income families with 8% annual portfolio growth.
Age 95 is another assumption he challenged: most retirees’ spending peaks early and many older Americans have health conditions that shorten life expectancy, making some retirement plans overly cautious.
Financial mistakes can also signal cognitive decline years before a dementia diagnosis, he said, urging families to watch for erratic spending, unpaid bills and scams while using budgeting and retirement-planning tools.