Money Lesson Single

Does 4% survive?

The four per cent rule says take a twenty-fifth of your pot in year one, then give yourself a pay rise with inflation for life.

Take a twenty-fifth of whatever the pot is worth instead and you are paid less every year, and a lost decade at the start shows which promise actually holds.

ISA Investments Savings Account Property Expenses

Take a level four per cent

3 Goals · 1 What-If

Draw a twenty-fifth of the pot in the first year and raise it with inflation every year after, whatever the pot is worth.

Try this plan

ISA Investments Savings Account Property Expenses

Take four per cent of the pot

3 Goals · 1 What-If

Draw a twenty-fifth of the pot as it stands each year, so the income falls when the market does and rises when it recovers.

Try this plan

Take a level four per cent Take four per cent of the pot

The level rule pays you more every year until the pot is empty, and then it pays you nothing at all; the flexible rule pays you less every year and never runs out.