One thing most retirees want to avoid is outliving their money. Since the mid-1990s many of them have relied on a staple of retirement planning known as the 4 percent rule to avoid that. Although the name says 4 percent, the rule states that if retirees withdraw 4.5 percent of their savings every year, adjusted for inflation, their nest egg should last 30 years, the length of time generally used for retirement planning.

That percentage was calculated at a time when portfolios were earning about 8 percent. Not so anymore. Today portfolios generally earn much less, about 3.5 to 4 percent, and stocks are high-priced, which is linked historically to below-average future performance.

Michael Finke, a professor in the department of personal financial planning at Texas Tech University in Lubbock, is a co-author of a paper critical of the rule, “The 4 Percent Rule Is Not Safe in a Low-Yield World.” He says there are many problems with Bengen’s rule, but a big one is that it doesn’t acknowledge the new economic reality of prolonged low returns.

“There haven’t been any historical periods that look like today,” Finke said. “We’ve never had an extended period where rates of returns on bonds have been so low and valuation on stocks so high.”

Strict application of the 4 percent rule also does not factor in how important returns are in the early years of retirement, something known as the sequence of returns. “The first years of returns have an outsize impact on your retirement savings sustainability,” Finke said. He used an example of $500,000 in savings earning zero for the first five years of retirement. Applying the 4 percent rule (that is, 4.5 percent), you will withdraw $22,500 a year. At the end of five years, your portfolio is left with $387,500. If returns go up, they are being earned on a smaller amount of savings than if you had gotten positive returns those first five years or had withdrawn less, Finke said. “You have less money to use to earn money for the next 25 years.”

High inflation early in retirement can have a similar impact, especially if earnings are also low. Taking out more money just to keep up with the rising cost of living will accelerate the depletion of savings, Finke said. Although the inflation rate today is 1.5 percent, historically it has been about 5 percent, he said.

Many advisers recommend maximizing earnings by moving away from the 60 percent stocks to 40 percent bonds portfolio allocation on which the 4 percent rule is based, says Jay Wertz, director of wealth advisory services at Johnson Investment Counsel, a wealth management firm in Cincinnati. He says that as interest rates have fallen and stayed low, “earning 2 to 3 percent on 40 percent of your assets for the next several decades doesn’t really make sense.”

Retirees wanting more certainty in the future might consider investing in a deferred income annuity, Finke said. Deferred income annuities pay a yearly income that kicks in later in life — usually starting about age 80 or 85. Rather than an investment, Finke says, it is essentially “an insurance product you buy so that you won’t run out of money in old age.”

No matter what route retirees take to ensure their savings last, the 4 percent rule may not be the one to follow, especially for those whose portfolios are heavily invested in bonds, Wertz said. Those retirees “are likely to fail miserably using the 4 percent rule,” he said. “They aren’t generating the returns to fuel it.”