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The “4% rule” of retirement has been hotly debated the past few years as more and more baby boomers leave the workforce. Many now say that 4% is too high of a withdrawal rate for the average retiree considering the low interest rate environment. If you intend to follow the typical retirement investing advice that most financial companies will recommend to their clients (which usually involves recommending one or more of their company’s mutual funds that have a high bond allocation), then the fixed-income portion of your portfolio will certainly fall short of covering a 4% return.

The real problem with the 4% rule isn’t the idea of the withdrawal rate, its the perception of what a retiree is “supposed” to be investing in. Investment companies have done a great job marketing their mutual funds to retired individuals touting a fund’s “proper” allocation of bonds and the assumed safety and low volatility of such investments.

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