About this episode
Listener Sherry asks a good question: How do large, one-off expenses (like a new roof, new car, etc.) fit in the 4% Rule? James explains the concept of the 4% Rule and its limitations while demonstrating how it can be an effective guideline in planning and forecasting retirement success. He addresses the importance of anticipating one-off expenses and, depending on your portfolio withdrawal rate, using sinking funds to get a reality check on where you stand. Questions answered: Are one-off expenses covered in the 4% Rule? Who should be concerned with creating sinking funds for one-off expenses? Timestamps: 0:00 - Sherry’s question 3:19 - Shortcomings of the 4% Rule 5:30 - Look at income and outcome 6:58 - Portfolio withdrawal rate 10:51 - Example of no margin 13:02 - Sinking funds 16:57 - New reality check 18:49 - Consider the duration of expenses 20:17 - The wrap-up Create Your Custom Strategy ⬇️ Get Started Here. Join the new Root Collective HERE!