Retirement Planning: Why Jaspreet Singh Doesn’t Follow the 4% Rule
Written by
Yaël Bizouati-Kennedy
Edited by
Cory Dudak
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Jaspreet Singh, CEO of Briefs Media and host of The Minority Mindset Show, doesn’t believe in the so-called 4% retirement rule. The rule is often cited by financial experts, and as explained on the Charles Schwab website, “it’s relatively simple.”
“You add up all of your investments and withdraw 4% of that total during your first year of retirement. In subsequent years, you adjust the dollar amount you withdraw to account for inflation. By following this formula, you should have a very high probability of not outliving your money during a 30-year retirement, according to the rule,” according to Charles Schwab.
Yet, Singh, in a recent interview with GOBankingRates, said if you abide by this rule, that means if you want to live off $50,000 a year, you’ll need $1.25 million saved for retirement.
“I don’t follow the 4% rule because I like investing for cash flow. My goal isn’t to sell my investments to have an income,” said Singh. It’s to generate enough cash flow from my investments (real estate and dividend paying stocks) to cover my expenses.”
Singh further argued that he can generate 3-10% in cash flow for every dollar that he invests.
“That means, if I want $50,000 a year in income, I will need somewhere between $500,000 ($50,000 / 10%) and $1.67 million (50,000 / 3%) to live financially free,” he said. “Plus, this cash flow investing also fights off inflation because if you invest in strong assets — your cash flow (should) grow with inflation.”
Singh noted, however, that the amount of money you need to retire and live comfortably is going to depend on your financial goals.
“I could make a blanket statement and say ‘you need $5 million dollars to retire’ but if your goal is to live on a small farm in Iowa and grow your own food, you won’t need that much money,” he added.
Yet, he also stressed the fact that $100,000 doesn’t stretch as far as it did five years ago. “That means you’re going to need more money to be financially free today than you did a few years ago. You can thank inflation for that,” he added.
The importance of the inflation factor is something Singh has mentioned several times when it comes to this rule.
For instance, in a YouTube video posted in April 2023, Singh said the 4% rule was created in 1994 by William Bengan — yet, back then, “we had inflation between 2% and 3%.”
In turn, to generate cash flow, especially in the period of high inflation the country has been facing for a few years, you have to choose the right assets.
“We’ve been seeing rent prices grow, which means if you’re a cash flow investor in real estate, your rental income has been growing,” he said in the video. “But also in the stock market — if you’re a cash flow investor in the stock market, chances are you’ve been seeing your dividends grow as well now.”
Yet, he also noted that this does not mean that rents and dividends always grow.
“When you’re in an economic slowdown, rents can get cut, dividends can get cut. But this is where you have to understand the different ways that you can invest your money,” he added.
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