There’s a pattern I noticed during my years in tech, and it’s followed me into business ever since.

Whenever something sounds easy—like a no-brainer, like everyone’s doing it and you’d be stupid not to—it usually means one thing: the person claiming it doesn’t yet understand the nuances. The gaps. The edge cases that turn “guaranteed” into “I didn’t realize XYZ could/would happen…”

The 4% rule is one of those things.

If you’ve spent any time in personal finance circles, you’ve heard it. Accumulate a certain amount in the S&P 500. Withdraw 4% per year. Adjust for inflation. The math “guarantees” your money lasts 30 years, or your retirement.

It sounds clean. Simple. A formula you can set and forget.
And that’s exactly why it’s dangerous.

The Timing Problem Nobody Talks About

The 4% rule assumes the next 30 years will behave like the last 30. It assumes you’ll retire at exactly the right moment—when markets cooperate with your timeline.

But markets don’t check your calendar.

What if you retired in 1968? You would have walked straight into a 16-year stretch where the market delivered almost nothing. The 1970s bear market and early 1980s stagnation kept the index flat for over a decade.

What if you retired in 2000, right before the dot-com crash? You wouldn’t have seen real gains until 2013. Thirteen years of waiting, while your “guaranteed” withdrawals slowly drained your portfolio.

The rule works beautifully in backtests. But backtests don’t pay your mortgage when you happen to retire six months before a crash.
How many theories have looked perfect on paper, until reality knocked the teeth out of them with some black swan event nobody predicted?

Past Performance: The Convenient Starting Point

Here’s something that surprises almost everyone I talk to.

When I ask people to look up the average return of the S&P 500 over the last 100 years, they expect a number close to what they’ve heard—10%, maybe higher.

Then they see the actual data.

The last 30 years? Around 9% annually. Solid.
But stretch back further? Since 1928, the average drops closer to 8%. And that’s the average—not the minimum. It doesn’t tell you about the years where portfolios got wiped across the floor.

• 1931: down 43%
• 1937: down 35%
• 1974: down 26%
• 2008: down 37%

Those aren’t footnotes. Those are years where real families watched decades of savings evaporate. And the formula? It just assumes you’ll ride it out. That you’ll have the stomach, the timeline, and the luck to recover.

What do all those financial disclaimers say? Past performance is not a guarantee of future results. Funny how that warning appears on everything except the retirement advice finance gurus give.

A Rule Invented Yesterday

Here’s what really gets me.

The 4% rule was published in 1994. A financial planner named William Bengen ran backtests on historical data and came up with a “safe withdrawal rate.”

Math existed long before 1994. The stock market existed before 1994. Retirement existed before 1994.

So if this was some universal law of money, why didn’t our grandparents use it? Why wasn’t this the standard in the 1950s, 60s, or 70s?

Because it’s not a law. It’s a backtest. A model built on specific historical conditions that may or may not repeat. The guy who invented it has since revised his own numbers multiple times—first to 4.5%, then to 4.7%. Even he doesn’t treat it as gospel.

Yet somehow, millions of people are betting their family’s entire financial future on a formula that’s barely 30 years old.

The Comfort of Not Thinking

In reality, the 4% rule isn’t really about math. It’s about comfort. (And marketing, but that topic is a 2 hour rabbit hole).

The mass crowd wants something to follow. A rule. A formula. Something that removes the burden of asking hard questions and thinking through edge cases.

What if inflation spikes for a decade? What if the market returns 4% instead of 9%? What if your retirement lasts 40 years instead of 30? What if you face a major health expense in year three?

Those questions are uncomfortable. They don’t fit neatly into a spreadsheet. So people ignore them and cling to a number that makes everything feel handled.

But your family’s financial future isn’t a spreadsheet exercise. It’s not something you solve once and never revisit. The decisions you make today will echo for 30 years. Maybe longer.

Beyond the Formula

I’m not saying don’t invest in the stock market. Equities have a place in almost any portfolio.

But thinking your financial future is handled because you bought some index funds and memorized a withdrawal percentage? That’s not a plan. That’s hope dressed up as strategy.

Real financial resilience means thinking beyond the stock market.

It’s easy to buy stocks. Anyone with a brokerage account can do it in five minutes. But it’s not easy to build a portfolio spanning multiple asset classes, across different geographies, using the right investment vehicles for your specific situation.

That takes work. It takes learning. It takes actually thinking about your family’s unique circumstances instead of copying what everyone else is doing.

The families I work with don’t operate on magic rules. They build structures that account for uncertainty—because uncertainty is the only guarantee. They create optionality across jurisdictions, income streams that don’t depend on a single market, and plans that adapt when reality throws a curveball.

That’s the difference between following a formula and actually being prepared.

Your 30-Year Decision

Don’t hand your family’s future to a formula built in an artificial environment by someone who’s never met you, doesn’t know your goals, and won’t be around when things don’t go according to plan.

The decision you make today about how to structure your finances, where to hold assets, how to generate income—that decision echoes for decades. Your children will inherit the results of your thinking, or your lack of it.

Take the time to actually learn. Actually think. Ask the hard questions. Explore the edge cases.

Because 30 years from now, you won’t remember the clever rule you followed. You’ll only know whether it worked.
Make that impact a positive one.