When it comes to long-term investing, vehicles like traditional IRAs, Roth IRAs, and company-sponsored 401(k) plans have long been the go-to options. But if you’ve lived through market crashes like those in 1987, 2001, 2008, 2020, or 2022, you know how unsettling it can be to keep your money in the stock market.

Rising inflation only adds to the concern. To maintain your lifestyle, you may find yourself needing to withdraw more each year—potentially putting your retirement at risk. When inflation hits during a bear market, your savings can take a double blow.

In fact, a recent Kiplinger survey found that over 70% of people age 50 and older are worried about inflation eating away at their nest egg.

So, how much should you withdraw each year?

The 4% Rule: A Traditional Approach

Back in 1994, MIT graduate and certified financial planner William Bengen introduced what’s known as the 4% rule. The idea is simple: withdraw 4% of your retirement portfolio in the first year, then adjust that amount each year for inflation.

For example, with a $1 million portfolio, you’d withdraw $40,000 in the first year. If inflation is 2% the next year, you’d increase your withdrawal to $40,800.

This strategy has been widely used, but it doesn’t always account for today’s rising costs—or the volatility of modern markets.

The 10% Rule: A More Modern Alternative

The 4% rule was groundbreaking in its time—but like 90s fashion, it may now be a bit outdated. With today’s inflation, your expenses grow faster, and relying solely on incremental increases might leave you falling behind.

Enter the 10% rule.

Instead of slowly drawing down your savings, you can invest in high-yield, income-generating ETFs that offer monthly dividends. These funds can provide a steady stream of income—without touching your principal.

One example is JPMorgan’s Equity Premium Income ETF (JEPI). This is a covered call ETF based on the S&P 500 that offers consistent monthly dividends and has historically provided a 10%–12% annual yield—even during down markets.

Using the same $1 million portfolio example, a 10% yield would provide $100,000 per year, or about $8,333 per month. And since your principal remains intact, your purchasing power and standard of living are protected—no need to worry about outliving your savings.