Fuel for the FIRE: Updating the 4% Rule for Early Retirees
By kgrunsfeld@hightoweradvisors.com on May 2, 2023
An updated perspective on saving and investing for retiring early
Retiring early has possibly never sounded so good — and yet seemed to be such an unattainable goal — to so many people. From generational shifts in work-life balance philosophies, to a renewed focus on passion projects post-pandemic, working until a traditional
retirement age is becoming less congruent with pre-retirees’ goals and expectations. Yet, at the same time, inflation and market losses this year are eroding the very savings — and confidence — needed to make leaving the workforce earlier possible.
To help those interested in early retirement with this dilemma, including by separating sound guidance from industry myths, we hosted Paulo Costa, PhD, an investment strategist at Vanguard whose most recent research focuses on the Financial Independence, Retire Early (FIRE) movement. FIRE followers seek to live simply, cut costs aggressively and save large percentages of their income in order to retire at a relatively young age. The movement has been
around for decades but has gained more momentum in recent years.
In our discussion with Dr. Costa, he addressed:
• How retirees can replace the concept of a fixed spending plan (e.g., the ubiquitous 4% per year) with more efficient, dynamic approaches
• The outdated historical performance assumptions upon which the 4% rule originated many years ago
• How retirees can adjust their asset allocations from historical norms to better align with their spending plans
Dr. Costa also provided examples to illustrate:
• How much more one could possibly spend in retirement by diversifying into international assets
• The significant difference that optimizing one’s social security claiming strategy can make on funding retirement
• The role that tax planning can and should play in retirement timing
For Dr. Costa’s perspective on the above topics and more, listen to Fuel for the FIRE: Updating the 4% Rule for Early Retirees webcast. And for help planning your retirement, please reach out to us to get a better understanding of what is possible. Helping clients retire on their timetable with the financial ability to fund what matters most to them is one of the most motivating and gratifying parts of our business.
Subscribe
OneArc Capital Advisors is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.
This is not an offer to buy or sell securities, nor should anything contained herein be construed as a recommendation or advice of any kind. Consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. No investment process is free of risk, and there is no guarantee that any investment process or investment opportunities will be profitable or suitable for all investors. Past performance is neither indicative nor a guarantee of future results. You cannot invest directly in an index.
These materials were created for informational purposes only; the opinions and positions stated are those of the author(s) and are not necessarily the official opinion or position of Hightower Advisors, LLC or its affiliates (“Hightower”). Any examples used are for illustrative purposes only and based on generic assumptions. All data or other information referenced is from sources believed to be reliable but not independently verified. Information provided is as of the date referenced and is subject to change without notice. Hightower assumes no liability for any action made or taken in reliance on or relating in any way to this information. Hightower makes no representations or warranties, express or implied, as to the accuracy or completeness of the information, for statements or errors or omissions, or results obtained from the use of this information. References to any person, organization, or the inclusion of external hyperlinks does not constitute endorsement (or guarantee of accuracy or safety) by Hightower of any such person, organization or linked website or the information, products or services contained therein.
Click here for definitions of and disclosures specific to commonly used terms.
Legal & Privacy
Web Accessibility Policy
Form Client Relationship Summary ("Form CRS") is a brief summary of the brokerage and advisor services we offer.
HTA Client Relationship Summary
HTS Client Relationship Summary
Securities offered through Hightower Securities, LLC, Member FINRA/SIPC, Hightower Advisors, LLC is a SEC registered investment adviser. brokercheck.finra.org
©2025 Hightower Advisors. All Rights Reserved.