{"id":664449,"date":"2026-05-25T17:33:11","date_gmt":"2026-05-25T17:33:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/664449\/"},"modified":"2026-05-25T17:33:11","modified_gmt":"2026-05-25T17:33:11","slug":"the-biggest-threat-to-your-retirement-isnt-a-bear-market","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/664449\/","title":{"rendered":"The Biggest Threat to Your Retirement Isn\u2019t a Bear Market"},"content":{"rendered":"

On this episode of The Long View<\/a>, author and retirement researcher Bill Bengen<\/a> discusses whether current inflation rates are worrisome, the ins and outs of withdrawal rates, private investments, and the risk of not planning for a long life.<\/p>\n<\/p>\n

Here are a few excerpts from our conversation with Bengen<\/a>, who pioneered the exploration of safe withdrawal rates with his 1994 research that gave birth to what\u2019s now called the 4% rule. <\/p>\n

How Inflation Damages Portfolios<\/p>\n

Christine Benz:<\/a> You\u2019ve looked at the impact of inflation on safe withdrawal rates. In fact, I remember when Jeff [Ptak] and I spoke with you last<\/a>, it was during that period when inflation was really soaring, and I recall that you were quite pessimistic about the impact of inflation, especially if it persisted for a long time at those levels for retirees. Can you talk about how retirees should approach inflation, and should they be worried if inflation remains about where it is now, sort of in the neighborhood of 2.4%, 2.5%, or should they only really stress out if it starts trending much higher again?<\/p>\n

Bill Bengen: Well, current levels are not worrisome. There\u2019s the trend that\u2019s concerning. Indications I see in the macro data is that inflation is starting to heat up a little bit. And my research over the last 30 years has clearly indicated that inflation is the greatest enemy of retirees because it forces them to increase their withdrawals<\/a> and therefore damages their portfolios. So people need to be aware of the inflation trends. If inflation starts becoming like it did in the 1960s or \u201970s where it was double-digit for over a decade on average, then probably we\u2019re all going to have to cut back on our withdrawals substantially to preserve capital or else run out of money.<\/p>\n

Private Investments? \u2018Sit Back and Wait a Little Bit\u2019<\/p>\n

Amy Arnott:<\/a> I\u2019m curious about your thoughts on private investments<\/a>. We\u2019ve heard a lot of asset managers saying that people should carve out a portion of their portfolios for private equity and private credit. Is that something that you think people should allocate to?<\/p>\n

Bengen: Alternative investments are well beyond just simply private credit or private equity. I think you should invest in something that you\u2019re comfortable with, that you understand. I\u2019m not sure I understand private credit and private equity well enough to attempt investing in them. And right now, in the private credit area, there seems to be a lot of risk. May be a good time to sit back and wait a little bit on that category.<\/p>\n

It\u2019s really important for folks to recognize that once they do their plan and they come up with a number or withdrawal rate<\/a>, let\u2019s say 5.5% they\u2019re going to use, that is not the end of the process. They basically have a plan which is meant to last 30, 35, 40 years or longer, and a lot of things can happen in that period of time which might cause them to alter their plan.<\/p>\n

So they need, one, to have a benchmark to measure the performance of their portfolio against year by year to see if they\u2019re on plan. And they need to understand a couple of things\u2014that a stock market decline, a bear market, can temporarily raise withdrawal rates to scary levels. Might go from 5% maybe to 10% or 11%, but the best strategy with simple bear markets is probably to let them run their course and not do anything, and the subsequent market recovery will most likely bring your withdrawal plan back into line with its original intent.<\/p>\n

Completely the opposite logic applies to a sustained high inflation, as we had in the \u201970s. People who retired in the early \u201960s were hit with that 10 years after they retired, and it devastated them. And the lesson I\u2019ve learned from that is when you enter a period where inflation is likely to be sustained over a number of years at a high level, you need to cut your withdrawals immediately to preserve capital, even if it pinches, because at least you will have some money left.<\/p>\n

Inflation is terrifying, what it can do to a portfolio.<\/p>\n

Can Retirees Make Up Income?<\/p>\n

Arnott: It\u2019s interesting that people tend to spend so much time worrying about market returns and what is going to happen with the market, but in some ways, inflation is even more dangerous.<\/p>\n

Bengen: It is. And that\u2019s something we just need to be mindful of and watch it very closely and talk with our representatives in Congress about because it\u2019s extremely damaging to retirees because they have no way of making up for that lost income.<\/p>\n

Valentina Djeljosevic contributed to this article. <\/p>\n

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