Rethinking Retirement: How the 60/40 Rule and the 4% Rule Can Work Even Better

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For decades, financial advisors have relied on two timeless strategies to help clients prepare for a confident retirement — the 60/40 Rule and the 4% Rule. Together, these principles offer a simple yet powerful framework for managing and withdrawing retirement savings.

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The Traditional Approach

The 60/40 Rule recommends allocating 60% of your portfolio to stocks for growth and 40% to bonds for stability. Then, once retirement begins, the 4% Rule suggests withdrawing 4% of your portfolio value each year — adjusted for inflation — to provide steady income throughout retirement.

It’s a tried-and-true approach built on decades of market data and designed to help prevent outliving your savings.

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A Smarter Way to Strengthen Your Retirement Plan

Today, there’s an innovative way to enhance this classic strategy: replacing the 40% bond portion of your portfolio with a fixed indexed annuity that includes a Guaranteed Lifetime Withdrawal Benefit (GLWB).

Why make the switch? Let’s compare the numbers:

• Sample Total Bond Market Index Fund

  • 10-year average return: 1.9%

  • 20-year average return: 3.1%

• Sample Fixed Indexed Annuity (Purchased at age 55, withdrawals starting at age 65)

  • Internal Rate of Return (IRR) to age 85: 6.2%

  • IRR to age 90: 6.7%

  • IRR to age 95: 7.0%

That’s the power of guaranteed lifetime income — potentially higher returns and the confidence of knowing you’ll never outlive your money.

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Is an Annuity Right for You?

Fixed indexed annuities can be an excellent fit for clients who:

• Don’t need access to their funds for at least 10 years

• Want to secure a guaranteed income stream for life​

If you’re ready to explore how a fixed indexed annuity can strengthen your retirement income plan, our team is here to help.

Contact us at info@retirementenergy.com to schedule a consultation and find out if this strategy makes sense for you.

Your future deserves the energy of smart retirement planning — let’s make it happen.