Bill Bengen: The 4% Rule is OUT and the 5% Rule is IN

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Episode #647 Connect with Bill Bengen: https://www.bengenfs.com/ ~~~ Pre-Order Bill’s New Book "A Richer Retirement" here: https://www.amazon.com/Richer-Retirement-Supercharging-Spend-Enjoy/dp/1394343175 ~~~ Connect with Scott and Mindy: Scott: https://www.instagram.com/scott_trench/ Mindy: https://www.instagram.com/_mindyatbp/ ~~~ Follow BiggerPockets Money on Social: Facebook: https://www.facebook.com/groups/BPMoney Instagram: https://www.instagram.com/biggerpocketsmoney/ Bill Bengen, creator of the legendary 4% rule, returns with groundbreaking updates to his retirement research with good news for investors! After years of additional analysis, Bill now advocates for a 4.7% withdrawal rate—but the "why" behind this change is what makes this episode essential listening for anyone serious about retirement planning. Welcome back to the BiggerPockets Money podcast! Today we’re doing a dive deep with Bill into the psychological and practical challenges of retirement spending, from overcoming the mental hurdle of switching from saver to spender, to adapting your strategy based on market conditions. You'll discover how portfolio allocation and diversification have evolved, why real estate deserves a place in retirement planning, and the ongoing debate between active and passive management approaches. This isn't just about withdrawal rates—it's about building a comprehensive retirement strategy that protects your principal while providing the flexibility to adapt as markets and life circumstances change. Bill also addresses the often-overlooked aspects of retirement planning: managing debt, controlling expenses, and finding purpose beyond financial security. 00:00 The NEW 5% Rule 03:05 Evolution of the 4% Rule to 4.7% and Portfolio Allocation 05:50 Impact of Market Conditions on Withdrawal Rates 09:06 Adjusting Withdrawal Rates for Early Retirement 12:03 Psychological Barriers to Spending and Harvesting Principal 14:52 Market Valuations and Their Effect on Withdrawal Strategies 17:47 Rebalancing Strategies and Bond Allocations 20:57 Real Estate vs. Bonds in Retirement Portfolios 27:03 Tailoring Investment Strategies for Younger Retirees 40:19 Cash Reserves: Preparing for Market Changes 44:44 Finding Purpose in Retirement