--- title: It Might Be Time to Ditch These Two Retirement 'Rules' description: New research is turning conventional retirement savings wisdom on its head. authors: - name: Adam Hardy role: Lead Data Reporter url: https://money.com/author/adam-hardy/ bio: Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. Adam’s work has also appeared in Business Insider, Forbes, Nasdaq, The Penny Hoarder, Yahoo! Finance and more than a dozen local and regional newspapers. education: University of South Florida, BA, Magazine Journalism at_money_since: 2021 articles: 498 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Shopping - Taxes - Technology also_seen_in: - The Penny Hoarder - Forbes Advisor - Creative Loafing - The New York Times - The Washington Post - Bloomberg - Harvard Law School - The Federal Register - National Consumer Law Center - CBS News - Becker's Hospital Review - Business Insider - Mother Jones - The Week - Fortune - The Philadelphia Inquirer - National Association of Student Financial Aid Administrators (NAFSAA) - Education Advisory Board (EAB) - The Institute for College Access & Success (TICAS) - This Morning with Gordon Deal - Empower - Reddit social: - https://www.x.com/hardyjournalism - https://www.linkedin.com/in/hardyjournalism/ editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2024-12-27T17:04:21.000Z' modified: '2025-01-02T18:19:13.000Z' section: Retirement tags: - News word_count: 762 canonical: https://money.com/ditch-these-two-retirement-rules/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Illustration of a person stacking up some eggs symbolizing retirement](https://img.money.com/2024/12/News-Ditch-These-Time-Honored-Retirement-Rules.jpg?crop=0px%2C62px%2C2880px%2C1620px&quality=85) Rules are meant to be broken, right? New research is flipping two oft-repeated [retirement savings tenets](https://money.com/retirement-planning-rules-to-reconsider/) on their heads: the 4% withdrawal guideline and the [60-40 investment portfolio](https://money.com/why-this-classic-investment-strategy-still-makes-sense/). These particular rules can be helpful conversation starters, but they don’t work for everyone, according to two recent reports. The first, a new report from a financial research firm, suggests that your retirement withdrawals should, in most cases, be less than the widely recommended 4% rule of thumb. And earlier this month, a 2023 study gained attention after resurfacing on the research network SSRN. It argues for a highly aggressive stock allocation in your [retirement portfolio](https://money.com/how-to-rebalance-investment-portfolios-for-retirement/), suggesting the strategy is actually safer than a 60/40 portfolio. Here's a closer look. ## Put a gold-backed IRA into your golden years ### Gold IRAs are similar to traditional retirement accounts, but they are backed by investments in gold and other precious metals, such as silver, platinum, and palladium. To get started, click on your state. [Invest in Gold](https://money.com/pr/h28f7d74d02b?ap_referrer=%2Fditch-these-two-retirement-rules%2F) ## The 4% withdrawal rule In 1994, financial planner William Bengen's research in the [Journal of Financial Planning](https://www.financialplanningassociation.org/sites/default/files/2021-04/MAR04%20Determining%20Withdrawal%20Rates%20Using%20Historical%20Data.pdf) introduced the now-famous "4% rule," suggesting that was the magic "safe" number retirees should aim for when making their initial savings withdrawal, followed by inflation-adjusted withdrawals each subsequent year. The idea is that the “Bengen rule,” as it is sometimes called, ensures that your nest egg won’t deplete before 30 years. Assuming you retire at age 65, a 4% withdrawal rate should last you until at least 95, his research shows. Three decades later, that rule is still often recommended. But fresh data from [Morningstar](https://www.morningstar.com/retirement/whats-safe-retirement-spending-rate-2025), an investment research firm, shows that *your* "safe" withdrawal rate hinges on your length of retirement and your portfolio allocation. Assuming a 30-year retirement and a portfolio with 20% to 50% stock allocation, a withdrawal rate of 3.7% is ideal, Morningstar’s research found. Generally speaking, the longer your retirement and the higher your stock allocation, the less you should withdraw annually. For a 20-year retirement, you should be able to safely withdraw 5% each year, but if you’re looking to spend 40 years work-free, Morningstar recommends not exceeding 3.1%. And if you have an extremely aggressive portfolio, like the following study suggests, you'd want to withdraw even less, as little as 2.7% a year. ## The 60/40 retirement investment portfolio As you near retirement, financial advisors often recommend an incrementally conservative investment strategy. Typically, you'd start with the traditional 60% stocks, 40% bonds (aka 60/40) portfolio and then move more of your investments into bonds or cash as you retire and age. But a controversial [new study](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4590406) from a trio of finance professors at Emory University, the University of Arizona and the University of Missouri found that an all-gas, no-brakes retirement savings strategy far outperforms the 60/40 approach. The same is true for target-date funds. They say that a 100% stock portfolio is the way to go. In terms of diversification — if you can call it that — you should allocate 33% to U.S. stocks and 67% in international stocks, under their model. You read that right: All equities. No bonds. The authors found this approach “vastly outperforms” all other portfolios they measured in terms of building and preserving wealth in retirement, sustaining retirement spending and generating inheritances — or in other words, having large amounts of retirement savings left over after you die. They determined this by comparing various portfolio options for a hypothetical couple who started saving for retirement at age 25. All else equal, the study found that an all-equity strategy could allow the couple to save less of their income before retiring since their returns would be higher. In terms of retirement wealth, you’d need to regularly save 16.1% of your income in a target-date fund and 19.3% in a 60/40 portfolio to produce the same amount of money as a 10% savings rate in an all-equity portfolio. On the other hand, when the savings rates were equal, the all-equity portfolio generated 50% more wealth than the 60/40 portfolio, and 39% more than the target date fund. There are drawbacks, of course. Stocks are very volatile and a 100%-stock portfolio “can inflict intense psychological pain,” the authors wrote, when the market tumbles. “One worry is that some investors will abandon their investments rather than stay the course.” But, they say, the other investment strategies are also volatile — and in some cases *more* risky, they argue — than going all stocks due to the risk of outliving one's savings. “Our results, as a whole, do not suggest that the all-equity strategy is safe,” they wrote. “They merely suggest that it is safer than common alternatives.” ### Top Precious Metals Company on Inc. 5000 ![Invest in Gold](https://s3.consumersadvocate.org/prd/image/image/19305/medium_414558a1-29d4-465e-b5d1-921febc39ed2.png) Our Partner [Invest in Gold](https://money.com/go/1fd28b661fa3?bidid=4028883026&pmeta=p129-c736-u23969&ptid=662201350&ptoken=81afd67f949c01de39e43c26c9d8818f) ### Endorsed by Robert Kiyosaki — Up to $25K in FREE Silver on Qualifying Purchases ![Invest in Gold](https://s3.consumersadvocate.org/prd/image/image/24353/medium_69e2748f-b29f-4686-895b-4e103b4d0c3e.png) Our Partner [Invest in Gold](https://money.com/go/bd9cc9e1127e?bidid=4028883029&pmeta=p129-c736-u23969&ptid=662201350&ptoken=2cef7ec2b45213608e0008854c536f1e) ### Qualify for up to 10% in FREE silver ![Invest in Gold](https://s3.consumersadvocate.org/prd/image/image/21155/medium_2ce64332-874c-41c0-a3b9-7f738e834f1c.png) Our Partner [Invest in Gold](https://money.com/go/e5980df096c8?bidid=4028883022&pmeta=p129-c736-u23969&ptid=662201350&ptoken=ea42109c787eb592f1a3860d2aa3cf52) ![](https://s3.consumersadvocate.org/prd/image/image/19305/medium_414558a1-29d4-465e-b5d1-921febc39ed2.png) American Hartford Gold can help you take control of your financial future [Invest in Gold](https://money.com/pr/cdf8db27d320?ap_referrer=%2Fditch-these-two-retirement-rules%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/ditch-these-two-retirement-rules/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "Retirement Planning", "item": "https://money.com/retirement-planning/" }, { "@type": "ListItem", "position": 4, "name": "It Might Be Time to Ditch These Two Retirement 'Rules'" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/ditch-these-two-retirement-rules/#webpage", "url": "https://money.com/ditch-these-two-retirement-rules/", "name": "It Might Be Time to Ditch These Two Retirement 'Rules'", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-12-27T17:04:21.000Z", "mainEntity": { "@id": "https://money.com/ditch-these-two-retirement-rules/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/ditch-these-two-retirement-rules/#breadcrumb" }, "dateModified": "2025-01-02T18:19:13.000Z" }, { "@type": "NewsArticle", "headline": "It Might Be Time to Ditch These Two Retirement 'Rules'", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/12/News-Ditch-These-Time-Honored-Retirement-Rules.jpg?crop=0px%2C62px%2C2880px%2C1620px&quality=85", "width": 1012, "height": 569, "caption": "News-Ditch-These-Time-Honored-Retirement-Rules" } ], "author": [ { "@type": "Person", "name": "Adam Hardy", "url": "https://money.com/author/adam-hardy/", "@id": "https://money.com/author/adam-hardy/#author", "description": "Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. 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