When our children were small, their nanny, a dear soul, was very superstitious. Occasionally, she would rearrange furniture, ostensibly, to keep the spirits at bay. She had peculiar notions as remedies for childhood maladies, too. Her beliefs didn’t bother us; most importantly she adored our children. In the financial world, there are hoary ideas that border on superstition or perhaps need further review.

A commonly used rule of thumb is the 4 percent rule. Bill Bengen, hail his name, issued a now-legendary study where he found there has never been a 30-year period where 4 percent inflation-adjusted, annual withdrawals would exhaust a portfolio. But that’s just the minimum. Generally, 4 percent withdrawals mean you die with money in the bank. Conversely, Bengen only used U.S. returns; with other nations the results were not as rosy. Bengen’s 4 percent rule excludes fees, often 1 percent or higher, and tax liability. Use it as a starting point.

We’ve heard how stocks are for the long run, but from January 2000 through December 2009, the S&P 500 had a negative, annualized return. Both stocks and bonds have pros and cons. While stocks have generally outperformed bonds, that’s not guaranteed. Another notion is you should only spend income and not principal. While that works if you plan on being the richest person in the graveyard, I argue that goal is likely overrated.

You probably read somewhere you need three months living expenses in your emergency fund. If you lose your job or can’t work, three months may not be enough. It’s important to separate basic, essential expenses from variable ones, too. While we are on expenses, having an accurate handle on living costs is critical, overlooked and underappreciated.

Saving 10 percent of your income is great if you start with your first job. Most people are like me and dawdle around during their youth. Folks who drag around with saving for retirement have to increase the amount they set aside, or work longer. A rationale for saving in an IRA or 401K is the potential of a lower tax bracket during retirement; for high earners that’s almost a given. But required distributions at age 70 ½ can push some into a higher tax bracket during retirement especially if they relocate to a state with a higher income tax. Roth IRAs avoid this tax bite.

A truly foolish notion is mortgage interest reduces taxes. Yes, but you only deduct a portion of the interest. It doesn’t matter if you pay the government or the bank, it is still money you can’t spend. Home ownership as a way to create wealth can be overstated. 30A is a cocoon but even here prices can fall, don’t forget, sometimes substantially plus there is a weather hazard.

Re-examine commonly held notions and see if they are applicable for your situation.

You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.