BiggerPockets Money Podcast - Is the 4% Rule Dead?

Starting point is 00:00:00 Hey, Scott, is the 4% rule dead? Nope. All right, that wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench and I am Minnie Jensen saying, see you later, alligator. Or saying, ha ha, just kidding. We actually have a lot more to talk about about this. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen.

Starting point is 00:00:23 And with me, as always, is my market conscious co-host, Scott Trench. Thanks, Mindy. Great to be here. As always, great timing with your intro. Bigger Pockets has a goal of creating one million, millionaires, you are in the right place if you want to get your financial house in order because we truly believe financial freedom at the 4% rule is attainable for everyone no matter when or where you're starting.

Starting point is 00:00:43 And the math still holds even here in the scary conditions at the start of 2025. Scott, that intro was a little reminiscent of our show with Michael Kitsis way back in the very beginning of COVID in March of 2020, where we asked him that same question. Is the 4% rule dead? And he said, no. So, Scott, for those who are not familiar with the 4% rule, what is the 4% rule? What are we talking about here? Sure.

Starting point is 00:01:09 So the 4% rule is an attempt by a deep body of financial analysis to answer the question, how much money do I need in order to retire? And the idea is that a portfolio that is invested a specific way with a, for example, 60-40 stock bond allocation, although that range can vary. between 70, 30, and 50-50 stock bonds. A portfolio invested that way in major index fund investments, for example, historically, has never run out of money over a ensuing 30-year period. And that includes periods with massive economic pain, like a portfolio where someone retired

Starting point is 00:01:52 right before the Great Depression in 1929 or right before, you know, certain major events like the inflationary period in the 60s, 70s and 80s. in there. And so that it back tests every historical period that we have great data for in modern history in a 30-year look back. So while there's an endless debate about whether there could be a future situation where the 4% rule does not hold up in a technical sense, it has held up in every historical period, although it is true. In some periods, a portfolio that starts out out of a million dollars may decline in value. In most 30-year period, someone who was withdrawing 4% of their portfolio who starts the million dollars would actually end up with more wealth

Starting point is 00:02:37 at the end of the 30-year period than when they began. So it's an answer to that question. How much money do I need to retire early? I love that description, Scott. That was a really great description. Bill Bangan originally did this research in 1994 or 1996. I always get those dates mixed up in my head. But either way, it was a long time ago. Kitschus came in and ran the numbers where Bangen left off. So Bangan did it in the mid-90s. Michael Kitsis did it in 2018 and ran them. I'm looking at Michael Kitschus chart on a starting principle over the course of 30 years. There are some wild numbers. I think the most it gets up to is 9.5 million. And the lowest it gets to is not quite zero at year 30. In fact, if you

Starting point is 00:03:26 continue on this person loses their money and goes to zero at year 31. This is every scenario up until 2018 when he ran this report. Yeah. In the vast majority of cases, that chart shows you end up with more wealth after pulling 4% out of your portfolio every year, adjusted for inflation at the end of 30 years than when you began. And in a couple of situations, you end up with less wealth, but in no situation do you end up with zero wealth and truly run out of money over a 30 year period, right? So that's the 4% rule, and the math has not changed. In fact, the guy William Bill Bingen actually came out with an update saying that you could actually withdraw as high as 5% with certain portfolios in new research this year. I believe he has a

Starting point is 00:04:19 new book on that topic, and we will certainly be inviting him to discuss this new research onto the Bigger Pockets Money podcast in the coming months here. So that's the update on the 4% rule in a sense that does it cover, does it still work? Does it still uphold? Yes, we have no mathematical evidence that the 4% rule does not hold up. Now, let's talk about a couple of paradoxes here, Mindy, with that caveat that. First, we've interviewed a lot of folks in the fire community. We have met very few, maybe none so far still, who have truly.

Starting point is 00:04:53 retired at a 4% rule allocation. We had a couple of folks reach out who said, I retired at the 4% rule. And then it's like, well, they also have a rental property and they also have a paid off house and they also have a large cash position and those types of things. There's always a defense mechanism in play well beyond the 4% rule for many of the folks that we talk to that actually spend Tuesday retired and not working on a on a mostly stock bond portfolio. So that's the first That's the first paradoxes. We still have yet to meet a true, retired at exactly the 4% rule and have nothing else going on out there.

Starting point is 00:05:31 Most people are well beyond the 4% rule or have some sort of cushion on there. The second paradox here is Bill Bangen, the father of the 4% rule who just came out with that research, who we're going to interview shortly here, two years ago, announced that he was going 70% to cash. and it was like 30% in stocks and bonds out there for fear of market conditions here. I am the biggest proponent of the 4% rule in the math, and I answer the way I introduced this today, and I am not holding a 4% rule 6040, 70, 70, 30, or anything close to 50-50, stock bond portfolio. I am heavily allocated to other things like real estate, for example, and private lending

Starting point is 00:06:13 will be a part of my portfolio in the next few months. So these paradoxes all exist in the context. context of the 4% rule, even though the math is very sound and it is an excellent answer to the question of how much do I need to retire early. All right. So Scott, one thing that I have noticed, I don't know if you have noticed, but since about 2012, the market has been fairly up until the right. Oh my gosh.

Starting point is 00:06:37 This has been an incredible bull run for the last 12, 15 years, essentially. And people have made an incredible amount of money. in the stock market in particular, and they've done nothing. They just sit there and dollar cost average into it, and they've been rewarded to degrees unprecedented in history with those investments. So I actually looked it up on macrotrends.net. They have a 100-year historical chart of the Dow Jones, and December 2008 is when it hit the bottom and started climbing.

Starting point is 00:07:13 There have been dips since then, but that is the last time it has been like the last big low. So 2008 to 2025, Scott do that math really quick. How long is that? That is two, five, 17 years. 17 years of up into the right. So if I was in the stock market for the last 17 years, which I was, and I kept seeing it go up and to the right, with some small dips, I would not be tempted to go into bonds in any significant

Starting point is 00:07:48 capacity because bonds have traditionally, or in those same last 17 years, what have bond yields been? They've been fairly low, right? Like, I'm getting 12, sometimes 15 percent returns in the stock market, and bonds are giving you like 3 or 4 percent. I like 15 a whole lot more than I like 4. So my current bond portfolio is, I believe, $0. And I'm okay with that. I'm okay with the risk because I am with great risk comes great reward, potential reward.

Starting point is 00:08:23 And my portfolio has gone up significantly. But the 4% rule is what I based my early retirement number on. And I am not in a 6040 portfolio. And that is what the 4% rule is based. based on how many people do you think are in a 6040 portfolio who are fire firing in the next year, plans to fire in the next year, or have fired recently? I think less than 10% of the people who listen to Bigger Pockets money are in a 6040 stock bond portfolio, and it may be less than 5%.

Starting point is 00:09:01 Let's review the data here. So here's Mindy Smiling Face and Infimit Mirror. And now here's, I do a poll all the time, a bigger, pockets money, it's one of my favorite things. Thank you so much to everyone who watches the YouTube channel and responds to these polls. There's a wealth of really good information here that I just love endlessly collecting and then discussing on this. So let's look at this one right here. Okay, do you actually invest with the classic 6040 stock bonds portfolio? 680 people responded 90%, 89% said no, I own essentially no bonds with less than 10% of my portfolio.

Starting point is 00:09:35 4% said, yes, excluding real estate or cash, my investments are 60-40 stock bonds. So what we have here, more infinite mirror, is a dynamic of the, at least in the fire community, of people who are heavily concentrated in stocks. And that is both a function, I believe, of the extraordinary bull run we've had for the last 17 years, eight maybe more on there. Well, I guess 17 years exactly, with 2008 being the bottom. we've had an extraordinary bull run for that period of time, and the very low yield that bonds that are delivering right now, like VBTLX, Vanguard's Bond Index Fund, for example,

Starting point is 00:10:16 has a yield to maturity of 4.3% and an income yield of something in the threes. So that's just not very attractive to many investors out there, especially folks who are personal finance nerds. And that, I think, has resulted in heavily concentrated portfolios. And the risk I see for the fire community in many, maybe tens or maybe 100, hundreds of millions of American households, is that because of this dynamic of huge returns in the stock market and all incremental dollars going into stocks with very little bond exposure, this is a community that is not ready for a market pullback and does not have portfolios

Starting point is 00:10:52 that are allocated in the way that the 4% rule has been historically discussed. The 4% rule, you are not fire if you need $2.5 million to generate a hundred, $100,000 a year in spending, and you are 100% in stocks. You are not fire. You can fall out of fire with that. Now, if you have that $2.5 million portfolio 60, 40 allocated to stocks and bonds, then you are meeting the 4% rule. And you have, at least in history, never run out of money in a historical simulation calculator. It could be that this time is different, but I'm willing, I would be willing to personally bet that on a 60-40 stock bond portfolio that there will not be a reduction to zero over a 30-year period going forward.

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Starting point is 00:15:10 back when he did this in the early 90s. It was like, well, it's still weird, but it was like even more weird back then. We didn't have podcasts and internet to talk about it. I think that it's a lot easier to get yourself to a 60-40 portfolio when you are older and you're retiring at 65. Once you hit 60, you start to think, oh, maybe I don't want to risk all this money. But you have really compressed your investment timeline into, to fit into your fire goals. So I can, I see both sides. Yes, Bill Benkin said 60-40. And the Trinity group re-ran the numbers.

Starting point is 00:15:49 They said, yep, he's right. And Michael Kitsis re-ran them. And he said he's right. And Wes Moss ran them and said, yep, Bengen's right. So all these very, very smart people are looking at all of this historical data and past performance is not indicative of future gains. But they're looking at all this historical data. They didn't just make this up.

Starting point is 00:16:07 They said with this stock portfolio. And I mean, have you read the original report or the original article that Bill Bagan published in the Journal of Financial Planning way back when? It's so fascinating. He ran this at a higher. of her friends. So yes, I have read this. I do. I do. It's a really long article. If you want to read it, email Mindy at BiggerPockets.com, and I will send you a copy because it can be a little bit difficult to find online. It was not an online publication when it first came out. But he ran all these different

Starting point is 00:16:37 scenarios. He didn't just come up with this and say, you know what, this sounds good. He was a somebody sent me a note to say that he was not a rocket scientist. He worked for NASA or he did something with rockets and he's very, very, very smart. And then he decided to be a financial planner after he was done with that career. And he really looked at this from all angles and ran the numbers in all sorts of different ways. So I do believe that it is still valid. I am still basing my retirement ideas on it, but I am not following it correctly. So if I run out of money, first I will be very shocked.

Starting point is 00:17:13 But if I run out of money, it's my own fault because I'm not following the rules in the first place. And that seems rather harsh. I'm saying that about me. I hope that nobody runs out of money. But yours is true of everyone I have met in the fire community, right? There is a tiny fraction less than 5% of people who will tell you that they retired on the 4% rule with nothing else. And then when you actually talk to them, oh, there's my rental. There's my large cash position.

Starting point is 00:17:38 There's this other thing that I'm doing here. I do this particular, this kind of crazy thing to defray costs on this part. Like, they all have something going on. Nobody does this with the 4% rule, even though, again, like, you're asking me, is a 4% rule still sound? Does the mass still work? Yes. Is it dead?

Starting point is 00:17:56 Nope. Do ordinary people, the people we are trying to serve here on Bigger Pockets money, actually retire on the 4% rule and nothing else? No. And that's where we need to address it head on in order to help the folks in this community actually see Tuesday afternoon in their 30th. or 40s the way that they wanted to do it. And I think that's the fun challenge about this. That makes this job so interesting, right? If it was just a 4% rule, every path would be the

Starting point is 00:18:25 same for it. But it's not, it doesn't work that way in practice. Doesn't work that way in people's actual psyche. And we have to address that in order to actually achieve our mission of helping people build enough wealth and then stop and enjoy their lives. How do you approach market downturns if you're getting ready to retire? If you're retiring in your 30s or 40s instead of, you know, when you've got a 40-year horizon to save your money, a market downturn isn't as affecting as when you've got a 10-year window. Well, look, I think there's a couple of ways to go about it, right? The first one, and I think that the right answer, is to say there is a approach that makes sense when you're starting out for all-out aggression, right? Like when I got started, all-out aggression, highly leveraged house hack.

Starting point is 00:19:08 Everything was going into stocks. I would do that again today. the issue is if you continue that infinitely then you will end up at 65 with an enormous pile of wealth in most historical situations that is far more than you ever needed and you'll miss that 30s 40s 50s fire retirement that you said to yourself was the original goal right so that's the problem that's one so what one answer to the question is just keep going for many many more years than you really need to and am asked so much money that it's so far beyond what you actually need to retire that you don't have to make decisions based on driving cash flow. And Mindy, I'd argue that you're

Starting point is 00:19:49 kind of maybe in that situation to a little bit of a degree, right? Like you guys went so far beyond, you have so much more wealth than what was required for the 4% rule that it allows you to not really have to worry about the technical best practices in optimizing the portfolio component. Is that fair? As you were saying that, I'm like, oh, That's me, Scott. Yes. And not only that, I still work. I have this job.

Starting point is 00:20:13 I am a real estate agent and I, I want to say I made $200,000 last year as a real estate agent, working very little. I had a couple of really whopper of a deal properties, but I generate a lot of income. And I don't spend $200,000 a year except this year when we're building the house. I generate a lot of income in a way that. I'm really not reliant on my portfolio. Right now, I have the confidence that my portfolio will eventually recover because I'm not pulling anything out of it right now. Yep. And Mindy, guess what? I'm in the same boat here on that front, right? I find myself having started out, attempting to achieve

Starting point is 00:20:58 fire so I could play video games on Tuesday. And now I run an enormous, or fairly large company here, do this podcast, and work harder than ever on that front. So that's one answer to the question, and that is frankly the answer that you and I both chose. And it's not a not a terrible one for many folks on there, but it's not, you know, but that there is a cost to that. You're not retiring at the optimal point if that's your your particular your specific goal there. So that's, that's one answer to the question. The second way, I think, to really maximize that early retirement here is to say I'm going to be in this all-out aggressive accumulation mode. And then I'm going to stop and I'm going to flip the switch to something much more

Starting point is 00:21:44 conservative in the years building up to true early retirement. And it's very hard, I think, for folks to do that for seven to ten years, grind away, increase their income, begin amassing a slow but surely compounding pile of assets, and then stop and move it all into. a conservative portfolio that has 60, 40 stocks, bonds, and then begin enjoying it. That's the right answer, I think. I think that that's technically the right way to do this, is to go all aggressive and then shift it either gradually as we approach three, four, five years, seven years out

Starting point is 00:22:19 from retirement or do it all at once toward the end. But I think very few people will do that in practice, even though that's the right theory, I think. What's your reaction to those two answers to the question here? I don't think that going all out and then retiring and moving it into the conservative portfolio is what I would recommend. It seems like you are running just as much risk as if you didn't do that at all. I would suggest if you are retiring in the next, I don't know, three to five years or the next five years, I guess, start instead of allocating your money to the stock market, Keep what you've got there and then start allocating bonds.

Starting point is 00:23:03 Start buying bonds. Start buying bond funds. I know so little about bonds because I'm not in them at all. I've never really studied them because for 17 years or 16 years, we have had such a growth market that bonds didn't really make a lot of sense. I mean, they still make sense. They always make sense because you're hedging against other things. I wonder, Scott, do another poll.

Starting point is 00:23:31 How many people are in a, not in a 60-40 stock bond portfolio, but are 60-ish stocks and 40% something else? You just recently brought that real estate property that is acting as a bond for you. It's not going to be generating all of these giant returns that a stock market would, a good stock market, not the current stock market. But it's also fairly safe. It's a It's the kind of property that is always going to have tenants in it. It's a fourplex. So it's not like your tenants leave and then all of a sudden you're like, oh, shucks, now what?

Starting point is 00:24:09 You've got three other tenants to help you pay that mortgage until you get that fourth tenant in place. So the vacancy is not a big hit. But I wonder what other kinds of investments are acting like a bond. Like is gold? Gold is an inflation hedge. Yes, I think that the headline is every asset class has exploded over the last six years from January 2019, which is my favorite look back period in the current climate, to January 2025, except commercial real estate and then residential real estate has basically paced in price with the increase in the money supply. So I think that there's plenty of risk in residential real estate, but that other asset classes are at extreme risk. obviously I think Bitcoin's going to zero.

Starting point is 00:24:57 I've made that point very clear. And multiple things there, you can go beat me up in the comment section as the 900th to a thousandth comment disagreeing with me in my video, the rational investor's case against Bitcoin here on the Bigger Pockets Money YouTube channel. Gold, by the way, is another one on there. Gold has been pacing the S&P 500 for the last six years. Really? It's gone up to like, yeah, 2.3-ish X over the last couple of years.

Starting point is 00:25:24 I think it might have pulled back recently a little bit, but gold is whatever gold was as the store of value, it has gone up in value way faster than the money supply. So I am looking at the historic gold prices. Again, on macrotrends.net, they've got some really great, really great charts here. And I want to show you this. This is inflation adjusted. So look at this. Inflation adjusted in 1980, it was $2,700. Now it's $2,800. Yeah.

Starting point is 00:26:01 So the real return for gold from 2000 has been, what, like 5X? It's unbelievable, right? Inflation is not, this is real. This is inflation adjusted. This is inflation adjusted. But it's incredible how expensive gold is in terms of its historical value. I mean, investors are fearing the market right now, and we'll talk about that a little bit in a few minutes here as well. Or maybe that's a good transition point here to talk about what is going on in the stock market right now.

Starting point is 00:26:33 All right, my dear listeners, we want to hit 100,000 subscribers on YouTube, and we need your help. While we take a quick ad break, please hop on over to YouTube.com slash bigger pockets money, and make sure you are subscribed to this channel. Stay tuned after the break for more. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going and more importantly where your tax refund can make the biggest impact. Because the

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Starting point is 00:29:55 Okay, Scott, what's going on in the stock market right now? A whole lot of down. Yeah. We are recording this on March 11th. Yesterday, there was a 900 point drop based on commentary from the administration. Today, there is an additional drop. I haven't even seen how much yet because I've been working. but it is based on double tariffs on Canadian steel.

Starting point is 00:30:23 Look, I think the problem that I saw, that I see and saw, what is just historically high price to earnings ratios on a real or inflation-adjusted basis. So we discussed that at length in a previous episode here. That was the risk factor in here. And I think what is causing this problem is very simple. There's a large body of activity coming from the new Trump administration. And that activity is causing uncertainty, and some could use the word chaos, that is confusing markets and individuals. And I think several hundred million Americans are asking themselves the

Starting point is 00:31:00 question, am I comfortable having most or all of my financial portfolio and investment portfolio in stock market funds that are disproportionately allocated to the United States in the context to the current environment. And increasingly, more and more of those people are saying, no, I'm not comfortable with that. And Mindy, that scares the heck out of me. We can talk about the 4% rule all day long on this and how it works, but I'm just not comfortable allocating huge percentages of my net worth to stock market index funds given that risk. I think that's a real risk and that we could have a lot more pain to come. It can go every way, right? Who knows what the market's going to do with all this stuff. I just can't handle the heat, and so I got out of the kitchen.

Starting point is 00:31:46 And where did you go? I put it into real estate. I have a, I rebalanced my 401k and HSA accounts to 6040 stock bond portfolios. My bond fund of choice is VBTLX. I also have a large pile of cash, which I'll put into, I'll go back to private lending. And that one in the hard money space, and I will likely buy another rental property later on in this year. And I will likely make several syndication investments in the most distressed markets around the country, probably mostly here in Denver, in multifamily and or a sprinkling of office. If you don't want to rely on the 4% rule anymore or you don't want to rely on the 6040 4% rule, what options do you have, Scott?

Starting point is 00:32:29 Well, look, I think, I think, so let's go back to the 4%. Let's pretend we're retiring with a million or $2.5 million portfolio in the 4% rule. And let's begin to alleviate our fears, right? even if there's a crash as bad as the Great Depression or an inflationary environment as bad as the 70s and 80s. This rule is held up. Second, and it's all adjusted for inflation on the 4% rule of math. Second, that 4% rule assumes that you will never decrease your spending in the event of a market catastrophe.

Starting point is 00:33:01 It assumes that you will never earn another dollar of any type with any work whatsoever in the event of a downturn. part-time job, for example, to defray some of those expenses or offset components of it. It assumes you'll never get social security or other forms of benefits in there. It assumes that you'll never start a business. It assumes that you'll never swap certain spending for other things in an inflation area, just an inflation environment when eggs get expensive to eat oats for breakfast instead for a while. It makes none of those assumptions.

Starting point is 00:33:35 So all of those are ways to defray the risks, the 4% rule, before we get into either get into alternatives. Once we get into alternatives, there are plenty of options. Obviously, one of the ones I'm most comfortable with is real estate. I've been doing bigger pockets for the last 11 years on this. This is a clear area that I'm comfortable with and feel like I have some skill in. Private lending is another one that you can get into on this. Building a bigger cash position is another one. Starting some kind of side business, even one that's seasonal. For example, like we had that Christmas lights guy, a kid, come on the show kid. He was, 25. But we have this Christmas lights man that was doing that and making almost six figures

Starting point is 00:34:15 in a couple of months at the end of the year. There's so many different ways to begin doing that. But I think that having one or two of those alternatives layered into your portfolio, keep your formula. If you're like the 4% really like the passiveness of stocks and bonds, keep your formula and go hit it. And then layer on, you have likely many years between now and true fire. Every year or two, maybe every six months, if you're like me, every 90 days, layer in some side bets that can begin to compound because you just need one or two. I believe for most people to really defray the risks, the discomfort in the pit of your stomach with the 4% rule as your only backstop in your portfolio.

Starting point is 00:34:56 Just to build a couple of those over time. And that should put you more than over the edge when a decision comes to actually pull the trigger and retire early. The end result, there's still, I want to say it's 12 times. that you would have ended up with less than a million dollars at the end. And that is, you know, that's, that's all past information. But I think that a $1 million portfolio is going to be enough for people who have a paid-off house or a very low mortgage. My mortgage is $1,300 a month. I'm not going to pay it off very fast at all.

Starting point is 00:35:39 I can just build that into my numbers to make that an expense. I think that if you, I'm not in a low cost of living area, but my cost of living is low because I bought a house in 2019 for very little money compared to what I could get if I sold it. And now these prices aren't available. It's been five years. We've had that market run up. If you are a renter, your rents are probably going to go up over the next 30 years.

Starting point is 00:36:14 Yeah, that's a bet. That's a key bet, too, that informs parts of my portfolio, right? I mean, there's a lot of math that suggests that renting is better than buying right now with historical averages. But I believe that while 2025 will not see significant rent growth, I believe we'll see rents rise dramatically in 2026 and 27. across this country because a large amount of the supply that's going on like multifamily construction will start to abate and if interest rates stay high that should continue to push up demand for rentals because the alternative to renting buying a home is up there so I think that buying is a great way to defray risk of a 4% rule portfolio because you lock in your housing expense

Starting point is 00:37:01 adjusted for inflation whether you use a mortgage or not on there so there is there is some something to be said for buying a home, especially, like, one of my favorite tactics that's coming up is I talking to people from high-cost living areas, and they've got like a million dollars in equity in their homes in certain parts of California or the East Coast. And those markets are also great because if you have a house like that and you're dead set on staying there, but you want to travel, many of those markets offer things like you can rent out your house 25% of the time on short-term rentals, only if you're an owner-occupant. That's an awesome way to defray early retirement expenses, by the way. So I think that there's lots of,

Starting point is 00:37:41 there's options that come with homeownership that are not available to renters where you just know your portfolio has to cover the renter's expense in some of those. So it's not, it's not black and white in that, yes, the math leans if you don't have any of these side bets in place towards renting over buying right now, but it is nice to just have it locked in. No, I can stay here for 20 years and not have to worry about material inflation adjusted costs to my to my living outside of my taxes and insurance and maintenance, I guess. Oh, and taxes and insurance. That's a great conversation that we'll have another time.

Starting point is 00:38:15 But yeah, I'm hearing that homeowners insurance is going up. I got a 90% quote for a 90% increase in my home insurance. Then I shopped it around and my pop premium will decrease by 50%. So shop around, guys, because some of these carriers are wildly different. Yes. Absolutely shop it around. And if your property taxes go, up exponentially, even if your property taxes go up just a little bit, protest them.

Starting point is 00:38:42 Figure out how your city will have a detailed way for you to protest your tax increase and protest it every single time. I have never protested and not gotten a reduction. Yeah, I plan to shop all of my rental property insurance policies and my assessed values my rental properties this year. I got a feeling that I've been neglecting that and I got like a good $10,000 to $15,000 cost savings annually in that exercise for me. They reassess on the odd year.

Starting point is 00:39:14 So they're going to reassess this year and you will probably see an increase next year. Yeah. Well, look, I think there's a case that my properties are down in value because we've got a buyer's market in the commercial side on some of these. So we'll see. Yeah. Yeah. I mean, yeah, you have to do some research in order to do the protest, but I have always had

Starting point is 00:39:33 it be well worth it for me to protest my. tax increases. Yeah, going back to the 4% rule piece there, though, this is a key concept because how little you spend, the less you spend, the easier all of this gets. So if you can control adjusted for inflation, the costs to commute, the costs to live in your house, your food costs, those types of things. You can get all, you can go from anywhere from reasonable, like paying off a mortgage and having your housing cost fixed outside of your taxes, insurance and maintenance to extreme, installing solar panels, for example, to mitigate your electricity bill for the foreseeable future, to planting a garden, to grow much of your own produce.

Starting point is 00:40:14 Like, you can get really extreme with this stuff, but that framework as you apply it puts less and less pressure on your overall portfolio and makes that margin of safety in the 4% rule safer and safer and safer and safer. And that's a luxury. I think that a lot of folks who do actually pull the trigger will have is not only is there these opportunities to earn more money, not only when you probably not do with nothing for 30 years that generates an income, but you'll also be able to tackle the projects that control expenses in your portfolio, do your own taxes, those types of things, to defray costs,

Starting point is 00:40:45 which can make your portfolio stretch longer. And again, that's not accounted for in the 4% rule if you put in conservative expense estimates up front. So those are all things you can do. And then again, there's always the world of alternatives out there. That sounds like a show for another day, Scott. I want to hear. from our listeners. What do you think of the 4% rule? Are you still excited about it? Are you in at 100% stocks? Have you adjusted your fire plans in response to the recent market conditions? Please leave a comment below. If you're watching this on YouTube, leave a comment below. We will also post this in our Facebook group. So we would love to hear from you. What are your fire

Starting point is 00:41:31 plans and what are your impressions of the 4% rule today. You can also email Mindy at biggerpockets.com or Scott at biggerpockets.com to give us your opinion as well. All right, Scott, I think this is a very lively discussion. I can't wait till the comments are coming in. Yeah, this was fun, Mindy. Thanks so much for joining me today. And I'm glad we didn't have a 15 second episode after all. Anybody who has ever met me knows that I cannot talk for only 15 seconds.

Starting point is 00:42:05 All right. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Mindy Jensen, now saying, see you later, Alligator. And yes, Jason, that's for you.

BiggerPockets Money Podcast - Is the 4% Rule Dead?

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