Christiane Delessert, a CFP licensee at Delessert Financial Services Inc. in Waltham, Mass., says that the 4% rule might still be applicable at some point five years from now when the world has gone through the deleveraging process. But the current market has forced advisors to rethink strategies. In the meantime, she is meeting with clients three times a year to monitor cash reserves and keeping two years of living expenses in cash or short-term bonds. She looks at refinancing debt rather than retiring it because of the current low interest rates, and she says that her clients are more receptive to dividend strategies than annuities, which give them less control. Some of her clients are even talking about continuing work.
And don't forget the old standby.
"Social Security is more important than ever," she says. "We make sure that the clients understand how meaningful that annual payout is. To receive $25,000 per year, at 4%, would require putting aside $625,000 of their own funds. "When you explain it that way, the client is much more humbled about the value of that Social Security payment."