For decades, long-term savers and retirees have relied on common rules of thumb to help motivate and guide them on the road to and through retirement. The precepts say you should aim to save 15% of your annual income, for instance, or subtract your age from 100 to determine how much of those savings to invest in stocks. Perhaps the best-known principle, the 4% rule, suggests that once you retire, you limit your initial portfolio withdrawal to 4%, then adjust the amount annually for inflation, to ensure your savings will last your lifetime.
But can 20th-century guidelines — directives developed before anyone ever heard of an iPhone, social media, the gig economy or other staples of life today — really serve the needs of savers and retirees in the more financially complex 21st century? Indeed, do general rules of thumb, no matter when they came to pass, make sense at all, given the big differences between people's personal situations and goals?
