The 4 percent rule, which has become a benchmark for retirement planning since the 1990s, might not be so hard and fast after all, some financial advisers here say.

For simplicity's sake, the 4 percent rule says a retiree with a nest egg of $1 million worth of stocks, bonds, and other savings, as an example, should withdraw 4 percent, or $40,000, during the initial year of retirement, then add in inflation every subsequent year. Following that formula, retirement funds should last three decades.

The rule is based on a model that holds true looking at data going back several decades. Since the recession, however, which brought a major drop in many portfolio values, some retirees who've relied on the rule could be at risk of outliving their retirement funds if they've had to delve too deeply into their principal, sources say.

Others approaching retirement might have to adjust their expectations, at least in the near term, they say.

Jerry Felts, principal at Jerry Felts CFP, of Spokane, says he's still using the 4 percent model as a long-term strategy.

He adds however, that with savings and bonds returning extremely low interest, "Trying to find yield in today's investments isn't as easy as it once was."

In the short term, it might be advisable for some clients to modify their expectations and withdraw 3 percent, at least for the first few years of retirement, Felts says.

Under ideal conditions, investment income would come via interest and dividends rather than liquidated assets, he says.

"We're still going to recommend investing in stocks and bonds, with emphasis on stocks that pay dividends and some inflation-protected Treasury bonds," he says.

A conventional portfolio that's heavy on stocks and bonds might not be sustainable with 4 percent withdrawals today, Felts says.

"A client who wants to go the old 60-40 route with stocks and bonds, I think is going to be in trouble," he says. "It's a changing world, and investors need to be more proactive."

Felts says he sometimes recommends annuities to investors.

"We have used some annuities in portfolios," he says. "Some variable annuities give 5 percent income guaranteed for life."

Other types of assets also could help round out a portfolio, such as investments in funds that focus on real estate or business-development companies.

Floating rate funds, also called bank-loan funds, also can help diversify a portfolio, especially when interest rates are expected to rise, Felts says.

Kelly Ruggles, president of American Reliance Group Inc., of Spokane, says the 4 percent rule is still a good starting point for clients to calculate how long their retirement funds might last.

With the volatility of the market, however, research now favors old-school planning, Ruggles says.

In cases where guaranteed-income investments are appropriate, he sometimes recommends insurance products such as annuities.

"In the past, if you were a broker, fixed products were heresy," Ruggles says. "On the other hand, if you were an insurance agent, brokers were the heretics."

He says, however, that all investment products have a purpose, and some are best used at different times than others.

"If you have a garden, you rototill in the spring," he says. "You wouldn't use a rototiller in the garden in July."

Along with the 4 percent rule, Ruggles says the much-favored modern portfolio theory has shown some vulnerability during market volatility.

Modern portfolio theory attempts to maximize returns for a given level of risk through a mathematically diversified allocation of assets. The idea is that prices in a certain asset class, such as stocks, move differently than another type of asset, such as bonds, theoretically making a combination of investments in various assets safer over the long term than investing in a single type of asset, Ruggles says.

The model assumes that prices of diverse assets move independent of each other, he says.

In recent volatile markets, however, multiple asset classes have risen and fallen together, a movement that Ruggles calls positive correlation.

"In the mid-2000s, the world changed," he says. "The world is correlated now."

That doesn't mean the modern portfolio theory is invalid, but it takes more diligence to identify truly diverse investments, he says.

"My thought process is to build a continuum of portfolios not correlated to each other. It's more difficult and complex," Ruggles says.

Don Moulton, certified financial planner and co-founder of Retirement & Tax Planning Specialists Inc., of Spokane Valley, says the 4 percent rule doesn't hold up in an extended bear market.

"We've been in a structural bear market since 2002," Moulton says, adding that the stock market might be in for another major tumble before a bull-market cycle begins.

He says a structural bear market in stocks is a long-term bear market that can last up to 20 years.

"It's not unreasonable to think we're not done yet," Moulton says. "We expect the market to be volatile."

Some financial advisers are suggesting that the rule should be closer to 2 percent under current market conditions, he says.

"Whether it's 2 percent or 4 percent, it's just a rule of thumb," Moulton says. "It's probably prudent to consider cutting back on how much to take out, if we're just going to do a rule of thumb in general."

The steady dollar-cost averaging strategy of investing a fixed amount at regular intervals helps retirement funds weather market fluctuations, but fixed withdrawals reduce principal more quickly in a bear market, he says.

Rather than rely on a rule, clients should be factoring in their age, health, asset size, and financial goals in retirement planning, Moulton says.

"If you are 65 and in great health, and you want to leave something for your heirs, you might not want to withdraw as much," he says. "If you are 80 and just don't want to outlive your assets, you might be comfortable taking bigger withdrawals."