Morningstar's John Rekenthaler asked whether the 3 percent is the new 4 percent for retirement withdrawals. Now that bond yields and high stock valuations make it all but impossible to make a 4 percent payout, publications such as The Wall Street Journal and The New York Times are questioning the credibility of the 4 percent rule.

Rekenthaler says these publications may be too quick to declare the death of 4 percent, however. When investors add a third asset class to the mix, small-company U.S. stocks, the withdrawal rate can increase to 4.5 percent. Three major changes can be made to increase the payout rate, Rekenthaler writes.

Investors should be flexible and avoid making hasty withdrawals, choose a lower success percentage, such as 80 or 90 percent, and choose a shorter time horizon, than say, 30 years, Rekenthaler writes.

To read more, click here.  

Edited by: Casey Quinlan


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