First off, I think that "Rules of Thumb" should be renamed to "Ruse of Thumb" and with good reason, all we need do is look at the dictionary definition of the word "ruse."
ruse (noun) an action intended to deceive someone; a trick; Eleanor tried to think of a ruse to get Paul out of the house.
And that's pretty much what a "rule of thumb" is in most instances, a deception. In personal finance it is at least.
How do "rules/rues of thumb deceive you you ask? Well, the deception lies in their simplicity and seemingly accurate, global application as "policy."
Here's some popular examples of "rules/ruse of thumbs:
"when you retire, subtract your age from the number 100, the answer will tell you how much of your portfolio should be investsed in stocks"
"you need 10x your income in life insurance"
"cash is king"
And there are many more. Part of the deception lies in the fact that the "ruse of thumb" leads you to believe that it's an effective substitute for work. You don't have to analyze anything, do any research, consider personal circumstances (either actual or uknown) you just simply pull the "ruse of thumb" out of your toolkit and whamo! You're done.
The problem is that largely, "rues of thumb" aren't true. They're widely enough touted and largely enough quoted to make you think that they're true and that they represent mainstream thinking, when in fact they are neither true or mainstream thinking. Since they are deceptively simple they are almost always foisted upon the uninformed by someone who will directly benefit by the application of them.
And yet, "ruse of thumb" do have mass appeal for sure. Why? Because the majority of the population would rather take the easy answer to it's questions, rather than to ask the tough questions. We're hard wired for "fight" or "flight" so our brains like simple solutions, going back to the day when, in sum and substance, there were only two answers, run like hell or fight to the death.
In his article; "Should You Seek Yield For Retirement Income," David Loper of Wealthcare Capital explains in susinct terms why the popular and oft used "ruse of thumb" that when you retire, you should invest alter or arrange your investments in such a way so that it maximizes your post retirement income.
For sure, many who will read this article will resolve that it just can't be that way. Many investors will contend that they're doing just that, seeking yield and they're doing just fine. They've got friends that are doing it and have done it and they're doing just fine too. Like most "ruse" it seems like a logical tact to take. (For the record, I've got a few friends who still smoke, still eat badly and never get a medical exam. For the record, they're fine too, at least for now.) But in the longer view, it's clearly not the right method.
Digging in and doing the hard work of planning a financial policy grounded in research, thoughtful conversation and deliberate strategy selection isn't as easy as pulling out your "ruse of thumb." Planning however is infinently less likely to fail and in reality, cheaper for most. And, planning is a cheaper option in absolute terms, both today and tomorrow.