Don’t FIRE with the 4% “Rule” (It Will Cost You) | Bigger Pockets Video

Episode #637

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For decades, the 4% rule has been the calculation every FIRE chaser has used to determine when they can retire early—risk-free. The math is simple: have a portfolio big enough to withdraw 4% per year to fund your lifestyle. But there’s one BIG problem with the 4% rule that nobody is talking about—a problem that could force you to work longer, ruin your retirement lifestyle, and put your portfolio in jeopardy if you don’t plan carefully. Tyler Gardner, former portfolio manager and financial advisor, is back on the show to share why much of the FIRE community may be wrong about this “rule.”

Scared of not having enough to retire, retiring during a market crash, or being forced to be frugal once you leave the workforce? That’s precisely what we’re talking about in today’s episode. The 4% rule has become untouchable within the FIRE movement, but its hard-and-fast downsides may lead to your FIRE’s demise.

Tyler shares what he thinks is the ultimate FIRE portfolio allocation, why he’s way more bullish on stocks and index funds than bonds, EVEN during retirement, and why target date retirement funds—often scoffed at—can actually help protect your portfolio once you FIRE. If you’re planning on retiring early with the 4% rule, think again. All of us have our doubts, and we’re sharing them today.

00:00 Intro
02:05 Is the 4% Rule Wrong?
06:05 This Saves Your FIRE
10:09 “One More Year” Syndrome
14:33 Healthcare in Early Retirement
16:34 Ultimate FIRE Portfolio Allocation
24:29 Include Real Estate?
29:49 Target Date Retirement Funds
36:25 Don’t Quit Working?
54:30 Find a Job You LOVE
57:02 Connect with Tyler!
58:30 FIRE Chasers Are Wrong!