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Op-Ed: With today's market volatility, the '4% rule' creates risk for America's retirees

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While some of the underlying thinking behind the so-called 4% rule was prudent, it was hatched in an era in which interest rates were much higher, capital markets less volatile and, most important, Americans had shorter lifespans. Given today's market volatility and changed retirement landscape, it's safe to assume that the 4% rule may be obsolete.

Colin Devine, principal at C. Devine & Associates, and Ken Mungan, chairman of MillimanThe 4% rule was hatched in an era in which interest rates were higher, markets less volatile and Americans had shorter lifespans.

Target date funds, mutual funds and exchange traded funds are often used to generate retirement income, yet annuities are the only financial product that was designed for and specifically provide protected lifetime income. While some of the underlying thinking behind the so-called 4% rule was prudent, it was hatched in an era in which interest rates were much higher, capital markets less volatile and, most important, Americans had shorter lifespans.

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