8 Retirement Planning Strategies That Are Outdated

By Chris Duderstadt

July 12, 2023

8 Retirement Planning Strategies That Are Outdated

Key Points – 8 Retirement Planning Strategies That Are Outdated

  • The 4% Rule Is a Retirement Planning Strategy of the Past
  • Flaws with Saving a Fixed Percentage of Your Income
  • Why You Don’t Need to Wait to Retire Until You’re Eligible for Social Security Benefits or Medicare
  • Carrying Debt into Retirement
  • 7 Minutes to Read | 23 Minutes to Watch

Are You Using an Outdated Retirement Planning Strategy?

Retirement planning has long been associated with specific rules and strategies that were once considered golden standards. From the 4% rule to saving a fixed percentage of income, these guidelines were widely accepted and followed. However, as our financial landscape evolves and individual circumstances vary greatly, it’s essential to challenge these outdated retirement planning strategies.

Today, Dean Barber and Logan DeGraeve will help us examine the flaws of several outdated retirement planning strategies. We’ll look at outdated retirement planning strategies such as the 4% rule, saving a specific percentage of income, having a specific dollar amount to retire, and other misconceptions like delaying retirement until specific ages or being debt-free. Logan and Dean helped emphasize the importance of tailoring retirement plans to individual aspirations and desired lifestyles by going through their list of eight outdated retirement planning strategies on America’s Wealth Management Show.

Outdated Retirement Planning Strategies

1. The 4% Rule

The 4% rule was coined in the 1990s and suggested that retirees could safely withdraw 4% of their retirement savings annually, adjusted for inflation, without running out of money. This rule assumed a 30-year retirement horizon and a traditional 60/40 portfolio allocation (60% stocks, 40% bonds). However, this rule has become increasingly outdated due to a variety of factors.

First, increasing life expectancy means that many retirees may need their savings to last for more than 30 years. Additionally, fluctuating market and interest rate environments can significantly impact the sustainability of a fixed withdrawal rate. Furthermore, everyone’s risk tolerance and investment goals are unique, making a one-size-fits-all approach inadequate.

“The rule of thumb is that it can be better than 4% at times because if we have good markets, let’s spend a little bit more. Let’s take a little bit of gain off the table. But if you get into years like last year, you may not want to spend 4%, especially with how fixed income performed.” – Logan DeGraeve

2. Saving a Fixed Percentage of Income

The notion of saving a fixed percentage of income, typically 10%, is another outdated retirement planning strategy. While saving is undeniably important, setting a specific percentage fails to consider individual circumstances and goals.

Different individuals have different financial obligations, such as mortgages, education expenses, or medical bills. Moreover, it disregards the potential for income growth and ignores the fact that some individuals may have limited capacity to save due to lower incomes or high living costs.

“You still need to save so if 10% is a guidepost, especially for someone starting their career, that’s a good way to start. But when you’re 40, 50 years old, you need to be more tactical.” – Logan DeGraeve

The most difficult thing for people to do when saving is taking a trip into the future. What do you really want your life to look like in retirement? And how much do you need to save to get there? That’s a much more complex discussion. And then it’s not just how much you save, but where you save to. Where are you then going to take withdrawals from and what are the tax consequences of that?

“That’s another problem with the 4% rule. How much of that 4% do I get to keep? Is that 4% taxable to me? Is it IRA money? Or is it Roth money that’s tax-free? Because if it’s Roth money, that’s tax free and that’s a whole different discussion.” – Dean Barber

3. Having a Specific Dollar Amount to Retire

The concept of needing a specific dollar amount to retire is deeply flawed and is an outdated retirement planning strategy. It suggests that retirement success can be determined by reaching an arbitrary monetary milestone.

However, this approach overlooks key factors such as inflation, health care costs, and the unpredictability of market returns. Additionally, it fails to consider the desired lifestyle of the individual. Retirement should be viewed as a phase of life focused on personal fulfillment rather than solely financial milestones.

“Everyone is different. That’s why it’s a customized financial plan to you.” – Logan DeGraeve

4. Outdated Retirement Planning Strategies Specific to Stocks and Bonds

The traditional advice of subtracting your age from 100 to determine the percentage of stocks in your portfolio is another outdated retirement planning strategy. While stocks historically provide higher returns in the long run, relying solely on age-based asset allocation neglects individual risk tolerance, investment goals, and time horizons. It assumes that risk tolerance automatically decreases with age, which is not always the case. Some retirees may have a higher appetite for risk, while others may prioritize capital preservation.

Similar to the stock-to-bond ratio based on age, the concept of holding bonds equal to one’s age is oversimplified and outdated. No matter what recent bond markets have shown us, bond investments have historically been considered safer and more stable than stocks, making them a component of conservative portfolios.

However, with the recent interest rate fluctuations due to increased inflation, relying heavily on bonds may result in insufficient returns to sustain retirement income. Investors need to evaluate their risk tolerance, income requirements, and market conditions to construct a well-diversified portfolio.

“When we’re managing money, we always want to have a bucket approach. You’ll have a short-term bucket that is more fixed income or money market. That’s money we’re going to spend over the next couple of years. We don’t want subject that to large swings in the market. Then you have a midterm that’s maybe a little bit more balanced. And you can also have a long-term bucket that is still more aggressive.” – Logan DeGraeve

5. Saving a Multiple of Income for Retirement

The notion of saving a fixed multiple, such as eight times one’s income, is a generalized approach that fails to capture the uniqueness of an individual’s retirement goals. That’s why it checks in at number five on outdated retirement planning strategies.

Income multiples overlook variables like individual spending habits, desired lifestyle, retirement age, and anticipated income changes over time. By focusing on income multiples, individuals may either save too little and compromise their retirement lifestyle or save more than necessary, limiting their present enjoyment.

“When most people are in their peak earning years, they’re saving a lot of what they’re making. Or they’re aggressively paying down debt. They’re not spending it on their lifestyle. That’s why I think that saving a certain multiple of your income doesn’t really work. It’s a broken and outdated retirement planning strategy.” – Dean Barber

6. I Can’t Retire Until I Am 62 Because of Social Security

The belief that retirement can’t happen before the age of 62 due to Social Security benefits is another outdated perspective. While it’s true that you become eligible for Social Security at age 62, claiming benefits early results in a reduced monthly payment.

However, this decision should be evaluated within the context of individual circumstances and financial needs. Claiming your Social Security to ensure you get the most out of your benefit. So, while you should be considering optimal age to claim Social Security benefits, it doesn’t mean you can’t retire at 62. Work with a financial professional to develop the best strategy for you.

“There are also people who think they need to work until 67 or 66 and 10 months because that’s their Full Retirement Age. That’s the one that’s most frustrating because those people won’t come talk to us until they’re 63 or 64 and they maybe could’ve retired at 60.” – Logan DeGraeve

7. I Can’t Retire Until 65 Because of Medicare

Similar to the misconception surrounding Social Security, the belief that retirement must be delayed until the age of 65 due to Medicare eligibility is outdated. While Medicare eligibility begins at 65, it does not mean that retiring before that age is impossible or financially unviable.

It’s essential to explore alternative health care coverage options, such as employer-provided health insurance or private plans, to bridge the gap until Medicare eligibility. Evaluating individual health needs and considering health care costs is crucial when determining the right age to retire.

8. I Need to Be Out of Debt When I Retire

The idea that retirement should only happen when you are completely debt-free is another outdated perspective. While reducing debt is generally advisable, it’s not always realistic or necessary to eliminate all debt before retiring.

Certain debts, such as mortgages or low-interest loans, may be manageable even during retirement, especially if they are offset by investment returns or other sources of income. It’s crucial to evaluate the nature of debts, interest rates, and the overall financial picture before making decisions solely based on debt elimination.

“There’s good debt and there’s bad debt. If you have credit card debt, that’s bad debt. Don’t ever carry credit card debt in the first place.” – Dean Barber

Avoid Outdated Cookie Cutter Retirement Strategies

As you can see, there are several outdated retirement planning strategies in today’s evolving financial landscape. Beliefs such as being restricted to retirement at specific ages due to Social Security or Medicare eligibility, the need to be debt-free before retiring, and the traditional rules of retirement planning fail to account for individual circumstances and goals.

Retirement planning should focus on personalized factors, including desired lifestyle, financial obligations, health considerations, risk tolerance, and individual preferences. You can get a glimpse of the many things that need to be considered with retirement planning by downloading and reviewing our Retirement Plan Checklist below.

Retirement Planning Strategies

Retirement Plan Checklist

Creating Your Individualized, Goals-Based Plan

By embracing a flexible and tailored approach, individuals can create retirement plans that align with their unique aspirations and financial situations, ensuring a more fulfilling and secure retirement journey. You can start building your unique, goals-based plan from the comfort of your own home with our financial planning tool. To begin building your plan at no cost or obligation, click the “Start Planning” button below.

Retirement Planning Strategies


Consulting with a qualified financial advisor can provide personalized guidance to help navigate the complexities of retirement planning and design a strategy that caters to individual needs and objectives. To schedule a 20-minute “ask anything” session or complimentary consultation with one of our CFP® Professionals, click here. We can meet with you in person, virtually, or by phone. Remember, retirement is not just about reaching a specific financial milestone; it’s about creating a fulfilling and satisfying post-work life.

8 Retirement Strategies That Are Outdated | Watch Guide

00:00 – Introduction
00:53 – The 4% Rule
03:02 – Saving a Fixed Percentage of Income
04:50 – Having a Specific Dollar Amount to Retire
07:23 – Own Your Age in Bonds
10:18 – Saving a Multiple of Income for Retirement
16:43 – Can’t Retire Until 62 or 65
20:59 – I Need to Be Out of Debt When I Retire
22:04 – What Did We Learn Today?

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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.