This paper assesses the impact of required minimum distributions on the 4 percent rule. The main finding pertains to ending retirement account balances. They are likely to be overstated when required minimum distributions are ignored in an analysis, and this would create a false sense of security with regard to longevity risk and legacy goals.
Author: Stephen J. Larson, PhD, CFP, serves as associate professor of finance at Ramapo College of New Jersey. He teaches in the areas of corporate finance and financial planning. Financial planning is the primary focus of his research. In 2009, he and his coauthor won the Financial Frontier Award for their work on timeshare intervals.