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Print this worksheet to test your own numbers against several starting rates.
Download the PDF (large print)The short version. The 4% rule is a rule of thumb: withdraw 4% of your portfolio in the first year of retirement, then raise the dollar amount with inflation each year. In the historical data it was built from, that approach lasted at least 30 years. It is not a law, not a guarantee, and newer research suggests a lower or more flexible starting point. [1, 2]
Where it came from
The idea comes from financial planner William Bengen's 1994 article in the Journal of Financial Planning. He used historical U.S. stock and bond returns to find the highest first-year withdrawal rate (as a percentage of the starting portfolio, then adjusted for inflation) that would have lasted at least 30 years in every starting year in the data, which began in 1926. He found that a stock allocation of 50% to 75% worked best, and that a 4% start never ran out in under 33 years in that history. He described 5% as risky. [1]
A 1998 study often called the Trinity study, published in the AAII Journal, tested many withdrawal rates and time periods using data through 1995. It reported that withdrawal rates of 3% and 4% were extremely unlikely to exhaust a portfolio of stocks and bonds, that 6% and 7% rates performed reasonably well only for short payout periods, and that most retirees would likely benefit from at least 50% in stocks. It also noted that it ignored taxes and transaction costs. [2]
How it works in dollars
| Year | Hypothetical example |
|---|---|
| Starting portfolio | $1,000,000 |
| First-year withdrawal (4%) | $40,000 |
| Second year, if prices rose 3% | $41,200 (the first-year amount plus 3%, not 4% of the new balance) |
| Third year, if prices rose 3% again | $42,436 |
Arithmetic only. The amount follows inflation, not the portfolio value. It is not a forecast.
What the rule assumes
- A 30-year retirement. Longer horizons were not the test. [1, 2]
- A mix of stocks and bonds, with at least about half in stocks. [1, 2]
- Spending that rises with inflation every year and never flexes up or down. [1]
- U.S. market history. The future may differ. [1, 2]
- No taxes and no investment costs. [2]
What it is not
- Not a guarantee. It describes what survived in past data. Our reading is that it should be treated as a starting point for a conversation, not as a promise.
- Not a personal plan. It does not know your taxes, health, pension, Social Security, or how long you will live.
- Not the final word. Newer research reaches different starting points, shown below.
What newer research says
| Source | Starting rate | Conditions |
|---|---|---|
| Bengen (1994) | 4% | 30 years, 50% to 75% stocks, inflation-adjusted. Historical data. [1] |
| Trinity study (1998) | 3% to 4% | Very unlikely to exhaust the portfolio, data 1926 to 1995. [2] |
| Morningstar (base case) | 3.9% | 30 years, 90% chance money remains, 30% to 50% stocks, forward-looking assumptions, constant inflation-adjusted spending, Social Security excluded. [3] |
| Morningstar (flexible spending) | Nearly 6% | Higher start, but spending rises and falls. [3] |
| Guyton and Klinger (2006) | 5.2% to 5.6% | For portfolios of 65% or more in stocks, with two "guardrail" rules that cut or raise withdrawals. Results are the authors' simulations of past data. [4] |
The Morningstar page is undated; it cites Morningstar's 2025 retirement income research. The ranges are not directly comparable because assumptions differ.
The takeaway is not that one number is right. It is that the starting rate depends on how long you need the money to last, how much flexibility you have, and how much risk of running short you can accept. See How Much Income Can Your Savings Produce? for a way to use these ideas.
Questions to bring to a planning conversation
- How many years does my plan need to cover, and what if I live longer?
- How much of my spending is essential, and how much could I cut in a bad year?
- How much will come from Social Security, a pension, or other income before I touch savings?
- What do taxes and fees do to the withdrawal number?
- What will I do if my portfolio falls early in retirement?
Frequently asked questions
What is the 4% rule?
A rule of thumb that you withdraw 4% of your portfolio in the first year of retirement and then raise the dollar amount with inflation. In historical U.S. data, that lasted at least 30 years.
Is the 4% rule guaranteed?
No. It describes what survived in past data under specific assumptions. Newer research, such as Morningstar's 3.9% base case, suggests a similar or lower starting point.
What does the 4% rule ignore?
Taxes, investment costs, spending that changes from year to year, retirements longer than 30 years, and other income such as Social Security.
Sources and review notes
- Bengen, W. "Determining Withdrawal Rates Using Historical Data," Journal of Financial Planning (reprint, Financial Planning Association)
- AAII Journal: "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable" (1998)
- Morningstar: What's a safe retirement withdrawal rate for 2026? (undated page)
- Guyton and Klinger, "Decision Rules and Maximum Initial Withdrawal Rates," Journal of Financial Planning (March 2006)
About this guide. This is general education, not tax, legal, or investment advice, and it is not a recommendation. Historical results do not predict the future. The examples are hypothetical and are not forecasts.