The Schwab Center for Financial Research has found that the 4% rule, a formula that has been used for retirement planning for over three decades, is flawed and treats every retiree identically. The rule, which includes a 50/50 split between stocks and bonds and targets near-100% confidence that the money will last, is rigid and assumes you increase spending by inflation every year, regardless of how your portfolio performs or whether your expenses change. It does not account for taxes or investment fees. The firm recommends targeting a confidence level between 75% and 90%, rather than the near 100% rule. Fidelity's policy could protect your entire net worth worth of $500.