The four percent rule.. for retirees

As I am in my last few decades of retirement, I have started trying to read up on what retirement means especially from a financial planning perspective.

When I look at my financials I am very far away from being able to retire early.. no way do I have sufficient money to be able to make that case. So I will need to ensure that I focus on building my career and my skills to ensure I last till the age of 60.

What though scares me is what I will do post retirement.  Though today I had a chance to read a blog where people retire from work.. early but are not in " retirement ". They use their time to do what they want, focus on building relationships or on trying to help people to build businesses.

So, I think I will not " retire", my dad is still very active and healthy but understanding financial planning for retirement is critical... and in this case I heard and read about the 4 percent rule!

The 4 percent rule basically states that you should NOT take out more than 4 percent of your capital every year.  This is to ensure your capital doesn't erode.

What this means is that you live on the interest or dividend income that you earn and not dip into the principal by more than 4 percent every year. The less you dip into in the initial years the better it is for the later part of the years.

Of course as you get into the retirement years ones income also reduces and tax liabilities come down and so do your daily expenses  ( apart from healthcare which actually goes up ).

This is an interesting way to think about the fundamental rule.. just like the rule of 72 that I have spoken about earlier.

Are there any more such rules towards retirement.. would be great to hear about them.

Let's share .. after all its simplefinancialsense