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Of all the Retirement Rules of Thumb discussed over the decades I’ve spent writing about investing and Retirement, few are more ubiquitous than financial planner William Bengen’s famous 4% Rule, which is his rough estimate of the annual percentage of a portfolio that can safely be withdrawn each year without causing your retirement nest egg to run out of money in old age (adjusted for inflation.) While he has more recently updated it to a slightly higher 4.7%, the “Rule” continues to fascinate and sometimes provoke financial advisors, retirement gurus and media pundits.
Indeed, the past weekend in the Motley Fool Hidden Gems Investing podcast, regular TMF Retirement contributor Robert Brokamp rebroadcast an earlier interview with Bengen, titled “The Father of the 4% Rule says Retirees can take out much more.”
I have written on this topic more than once; most recently late last year in my MoneySense Retired Money column: Experts opine on various tweaks to Bengen’s famous 4% Rule.
Below, we asked various North American advisors, business owners and other experts to weigh in via Linked In and Connectively (formerly Featured.)
Here’s how the question was posed earlier this month on Connectively:
What is your view of William Bengen’s famous 4% Rule, which he seems to have adjusted up to about 4.7%? Are either of these realistic percentage gains, or are they too optimistic or too pessimistic? If you have clients of varying ages (from Gen Z to retired Boomers), did any religiously cleave to this Rule or is it just a starting point around which specific investment objectives were overlaid?
As usual, we have only lightly edited the responses which appear more or less intact, complete with author picture, title and links to their respective web sites. The subheadings are either direct quotes from their input (indicated in quotation marks) or slightly edited variations of quotes.
“The Rule works as a conversation starter, not a finish line.”
Bengen’s rule is a solid anchor, not a contract. I’ve worked with retired clients who treated 4% as gospel and ended up leaving significant money on the table because they were terrified to spend: even when markets had doubled their portfolio.
The honest answer is that the “right” number depends entirely on sequence-of-returns risk, tax drag, and spending flexibility. A Boomer pulling from a traditional IRA faces a very different math than a Gen Z client with decades of Roth compounding ahead. Same percentage, completely different outcome.
Where I’ve seen the rule actually help is as a conversation starter, not a finish line. One business owner client near Crown Point was fixated on hitting a magic retirement number. When we layered in tax-efficient withdrawal sequencing — mixing taxable, traditional, and Roth accounts — their sustainable spending rate shifted meaningfully without touching the portfolio risk profile at all.
The Bengen rule also assumes relatively static spending, which almost no one has. Clients in their early retirement years typically spend more on travel and experiences, then spending drops mid-retirement, then healthcare costs spike late. A single fixed percentage ignores that entire curve. A living financial plan accounts for it. — Daniel Delaney, Owner, Seek & Find Financial
A useful mental anchor but don’t treat it like gospel
The 4% Rule is a useful mental anchor, but treating it as gospel is like using a map from 1994 to navigate a city that’s been rebuilt three times since. Bengen’s original research was groundbreaking for its era. It gave people a simple number to hold on to. But the world it modeled — steady bond yields, predictable inflation corridors, a relatively stable geopolitical backdrop — that world doesn’t fully exist anymore.
Here’s how I think about it. The 4% Rule assumes you’re a passive participant in your own financial life. You retire, you draw down, you hope the math holds for 30 years. That framing made sense when most people had one career, one pension, and one plan. Today, the most financially resilient people I know, from Gen Z creators to semi-retired Boomers, don’t think in terms of a single withdrawal rate. They think in terms of optionality.
I’ll give you a real example. A former VC CFO I spoke with last year told me he stopped thinking about the 4% Rule entirely when he realized his “retirement” would include three or four income-generating projects running simultaneously, most of them enabled by AI tools that didn’t exist five years ago. His withdrawal rate fluctuates between 2% and 6% depending on what’s producing cash flow in a given quarter. The rule became irrelevant because his income never fully turned off.
Bengen adjusting to 4.7% reflects updated data, but it still operates inside the old paradigm: accumulate, then deplete. For younger generations, the line between accumulation and distribution is blurring completely. A 28-year-old building a side business with AI isn’t thinking about safe withdrawal rates. They’re thinking about how to make their capital work alongside earned income indefinitely.
So is 4% too optimistic or pessimistic? Neither. It’s just incomplete. The better question isn’t “what percentage can I safely withdraw?” It’s “how do I build a life where I’m never fully dependent on withdrawals alone?” That reframe changes everything. — Runbo Li, Cofounder and CEO, Magic Hour AI
GenZ and Millennials ignore it completely
I view the 4% Rule as more of an idea to explore, not something carved in stone, and the 4.7% update is essentially Bengen coming clean about what many of us already say: One number will not make it through intact after meeting real-world markets, tax brackets, and spending needs. It is those Boomers taking 4% as their gospel and panic selling in a tough year or, worse, never adjusting for a tough sequence of returns early on during retirement where I have seen people make their biggest mistakes. On the other hand, my Gen Z and Millennial audience members ignore it completely because they are decades away, and they have much better control over income right now through negotiation or side work such as surveys and focus groups than by worrying about a withdrawal rate that is years away from being used. In my opinion, use 4% as a quick and dirty check and build yourself a withdrawal range based on your own individual circumstances. — Scott Brown, Founder, MintWit
“Real life rarely matches the assumptions behind any single retirement rule.”
From my perspective, the 4% Rule has always been more useful as a planning framework than a guarantee. Whether someone uses the original 4% guideline or William Bengen’s later research suggesting that a higher starting withdrawal rate may have been sustainable under certain historical conditions, I don’t think either figure should be treated as universally correct.
I’ve worked with business owners and professionals at different stages of their careers, and one thing stands out: real life rarely matches the assumptions behind any single retirement rule. Markets change, spending isn’t static, people retire at different ages, and unexpected expenses inevitably arise.
That’s why I encourage people to use the rule as a starting point rather than a destination.
For younger professionals, including many entrepreneurs, the conversation is usually less about withdrawal rates and more about building assets, increasing income, and creating flexibility. For those nearing retirement, the focus shifts toward sustainable income, but I still don’t recommend relying on one fixed percentage alone.
I’ve also noticed that financially disciplined people tend to adjust their withdrawals based on market conditions instead of following the exact same rate every year. They’re willing to spend a little less after a difficult market and a little more when their portfolio performs well.
As a founder, I appreciate simple financial frameworks because they help people begin planning, but they shouldn’t replace individualized decision-making.
If I were advising someone, I’d say the 4% Rule — or even 4.7% — is a reasonable benchmark, not a promise. The more important questions are: How long does your money need to last? How much flexibility do you have in your spending? What’s your investment mix, and how comfortable are you with market volatility?
In my experience, successful retirement planning isn’t about finding the perfect withdrawal percentage. It’s about creating a strategy that can adapt as your life and the markets inevitably change. — Max Shak, Founder/CEO, nerD AI
The Rule is “a stress-test starting point, not a spending command.”
The first clarification is that 4% or 4.7% is a withdrawal rate, not an expected investment gain. Under the original approach, a retiree withdraws that percentage of the starting portfolio in year one and then adjusts the dollar amount for inflation.
For a $1 million portfolio, the difference between 4% and 4.7% is $7,000 in the first year: $40,000 versus $47,000. That difference may look modest, but it becomes important when retirement begins before a major market decline or period of high inflation.
I treat either figure as a stress-test starting point, not a spending command. The appropriate plan depends on retirement length, taxes, fees, portfolio composition, pension or Social Security income, essential spending and the retiree’s willingness to reduce withdrawals after weak markets. A person retiring in their forties should not automatically use the same assumption as someone retiring at seventy with reliable pension income.
I do not have U.S. retirement-advisory clients, but my finance approach is to model several scenarios rather than rely religiously on one percentage. The safer plan is usually one that protects essential spending, keeps a separate reserve and allows discretionary withdrawals to adjust when markets or inflation behave badly. — Cem Oner, Founder / Finance & Public Data Publisher, hesapcebimde.com
If you are underweight equities or neglect rebalancing, “a fixed 4 per cent can be too optimistic; with disciplined equity exposure and regular rebalancing it is more attainable.”
I view William Bengen’s 4% rule as a useful planning baseline but not a fixed rule for every retiree. It provides a clear starting point for estimating sustainable withdrawals, but its realism depends on factors I see often in client portfolios, such as asset allocation, rebalancing habits, and savings adequacy. When investors are underweight equities or neglect rebalancing, a fixed 4 percent can be too optimistic; with disciplined equity exposure and regular rebalancing it is more attainable. Very few clients strictly adhere to a single percentage in my experience. Instead, the rule is typically used as an initial benchmark onto which specific investment objectives and cash flow needs are overlaid. I therefore advise starting with the 4 percent figure, conducting a full portfolio audit, and automating contributions and rebalancing to align the plan with individual goals. — Amir Husen, Content Writer, SEO Specialist & Associate, ICS Legal
Financial Advice should not be based on a single Rate of Return
Looking back at my over two decades of experience working with financial companies to boost their Internet presence, one thing I’ve learned is that guidelines like the 4% rule are so well-known because they’re easy to remember. The problem here is that most people confuse headlines or popular guidelines as a reasonable solution for their retirement. Whether they’re talking about 4%, or William Bengen’s idea around 4.7%, in some circumstances, I would consider those as opening lines of discussion.
Highly trusted financial institutions do not base their advice on a single rate of return. Financial institutions provide interpretation of the assumptions made regarding rate of return and customize advice according to retirement age, required income, taxes, health care expenses and other sources of income.
From my perspective, good financial advice doesn’t make any promises about guarantees. This allows one to realize the reasons why a certain rule may be wrong and to start a conversation with an expert in this field. A notable percentage may help clarify a complex idea, but good retirement strategies are always based on flexibility. — Derek Iwasiuk, Co-owner, Director of marketing, Searchtides
It all depends on Sequence of Returns, which is out of your control
The 4% Rule works fine as a starting number. That’s why most people accept it as a default. But you shouldn’t consider it a guarantee. Just guidance, not prescriptive one. The rule works only within the confines of the assumptions used to create it. Bengen wasn’t using an average of the stock and bond market returns. He used one specific period in the market and one very particular mix of assets.
The 4.7% rule is similar, only it uses slightly different numbers. When looking to live off your investments for the rest of your life, can you really go wrong using either number? It depends on the sequence of returns, which is completely out of your control.
For clients, do any of them follow the rule? I have to admit that I rarely use it with younger clients. Younger folks aren’t even thinking about the 4% rule because they have a time horizon of 30+ years before retirement and are much more focused on either a net worth target. FIRE number that is certain net worth multiples based on age. It’s the retirees that I talk to about the 4% rule, and often it’s just aspirational.
I find that telling clients to adjust their spending based on the most recent value of their portfolio is a more realistic approach to withdrawals than using either the 4 or 4.7 percent rules. I think both numbers are reasonable as a planning benchmark, but not something to strictly adhere to, given the levels of concentration in the equity markets and divergent inflation trends we see today. — Ankit Sarawagi, Curator, CFO Matrix
The 4% Rule is neither optimistic nor pessimistic
The 4% rule wasn’t optimistic or pessimistic. It was calibrated to a world that no longer exists. Bengen’s math assumed intermediate Treasury yields near 5% and CPI near 3%.
However, with real yields compressed and inflation regime shifted since 2021 (BLS CPI), a fixed percentage is a starting heuristic, not a plan. I model retirement as a runway, not a rule. I size a safety-stock of cash and short Treasuries in years of spending, let harder assets compound behind it, and re-forecast on triggers, not based on the date or season.
Lyn Alden’s fiscal-dominance work explains why the bond math changed. Clients shouldn’t cleave to 4%: they should know which regime their withdrawal plan assumes. I call this runway-grade retirement planning. — Colin Reed MBA, Independent Consultant, Modern Wealth Consulting
The Rule “reflects an historical worst-case survival rate, not a personalized income plan.”
I think Bengen’s 4% rule is often misunderstood. It reflects a historical worst-case survival rate, not a personalized income plan.
Bengen himself has since raised it to about 4.7% for 2026, which tells you it isn’t set in stone. It’s just something people have latched onto as a rule of thumb, and almost every rule of thumb isn’t designed to benefit the consumer. It’s more likely to benefit someone else.
The flaw is that it treats all of your retirement savings as a single account you withdraw from each month. You take 4% of your portfolio and adjust it for inflation, whether the market is up or down. If the market is down, especially early in retirement, that can be catastrophic for the retiree.
Retirees are usually much better served by having the right amount of protected lifetime income, through Social Security, a pension if they have one, and guaranteed lifetime income. That income flows like a river, arriving every month no matter what. Drought or rainy season, it keeps running.
Pull it out of a lake instead, and every time you dip your bucket in, you watch the level drop. Add a drought, and how confident are you about taking your water out each month? Aren’t you more likely to start taking less, and living a smaller life? Is a retirement where you feel forced to cut back really a successful one?
Is 4.7% viable? It could be. It depends on how the market performs and what interest rates do. What it doesn’t give retirees is certainty about the money they actually want to spend. A safe withdrawal rate that keeps moving is the main reason nobody can pin down their retirement number.
I doubt anyone follows that number religiously. How could you, while you’re watching your balance rise and fall and the financial news shouting about the latest crisis? Markets can drop hard during a year even if they finish flat. What if you need to pull money out right when it’s down? Would you be comfortable doing that?
And here’s something almost nobody talks about: your ability to make financial decisions at 55, 60, or 65 is far better than it will be at 80, 85, or 90. Do you want to be 85 or 90, with cognitive decline likely setting in, making these calls? Will they be wise ones?
We help our clients set the right amount of protected lifetime income, so they know exactly what they can spend each month and never have to worry about it. Few of them worry about market swings. For the kind of planning we do, a market decline is a headline, not a crisis. — Kurt Jackson, Retirement Lifestyle Architect, KJ Financial
“Whether 4.7% is realistic depends entirely on your retirement horizon and ‘sequence of returns’ risk.”
In my 30-plus years as a consumer finance attorney, I have watched thousands of people plan for retirement. Some did so with pristine mathematics, while others ended up in my office because their assumptions collided brutally with reality. William Bengen’s famous 4% Rule — and his subsequent upward adjustment to 4.7% to account for a more diversified portfolio — is a brilliant piece of historical backtesting. However, in the real world, treating it as an immutable law of nature rather than a flexible starting point is a dangerous gamble.
Whether 4.7% is realistic depends entirely on your retirement horizon and “sequence of returns” risk. If a Boomer retires at the dawn of a prolonged bear market, withdrawing 4.7% annually while their portfolio is actively shrinking is financial suicide; the principal can get hollowed out before the market recovers. For older Boomers with a traditional 30-year horizon, 4% remains a highly robust anchor.
But for Gen Z and Millennials — especially those eyeing early retirement — a 4.7% withdrawal rate over a 50-year retirement is recklessly optimistic. Over half a century, inflation, market volatility, and rising healthcare costs will feast on that portfolio. They should be aiming closer to a conservative 3% to 3.5%.
In my practice, I find that clients who “religiously cleave” to any single percentage rule are usually the ones most prone to panic when the market dips. The smartest clients treat the 4% rule as a baseline compass, not a precise GPS. They overlay it with specific, dynamic objectives.
First, they focus on entering retirement entirely debt-free. You can easily tolerate a lower withdrawal rate in a down market if you aren’t legally forced to service a mortgage or credit card balances. Second, they build a cash cushion — one to two years of living expenses held completely outside the market — to avoid selling assets during a downturn.
The 4% rule is incredibly useful for calculating your “nest egg target,” but actual retirement requires dynamic spending. When the market is up, you can spend; when the market is down, you tighten your belt. Rigidity in financial theory is comforting, but flexibility in practice is how you actually survive. — Lyle Solomon, Principal Attorney, Oak View Law Group
“Whether the baseline is realistic will depend on each investor’s ability to dynamically adjust their spending rates.”
1. The 4% rule by William Bengen, and the revised 4.7% benchmark he later created, serves as a foundation for many of today’s wealth management strategies. It is essential to recognize that Bengen’s benchmarks represent a safe initial withdrawal rate (and not expected long-term returns) from an individual’s portfolio. As such, revising the benchmark upward to 4.7%, based upon updated historical data, correct asset allocations, and tax efficiencies, allows for a better reference point for what might constitute an acceptable benchmark.
2. The notion that an investor should withdraw at a constant rate (e.g., 4.0% or 4.7%) may be both unrealistic and/or too conservative when there have been extended periods of time experiencing inflationary pressures, and/or excessive “sequence of returns” risks early in retirement. On the other hand, investors who have adopted growth-oriented portfolio strategies with some degree of flexibility regarding their spending may find themselves withdrawing more than they would if using a traditional “safe withdrawal rate.” Ultimately, whether the baseline is realistic, will depend on each investor’s ability to dynamically adjust their spending rates as opposed to relying solely on a single static percentage.
3. There isn’t anyone across the entire spectrum of clients (from Gen Z to Boomers) that strictly adheres to Bengen’s original withdrawal rates. Wealth management professionals view these withdrawal rates as simply a baseline in building customized investment plans and objectives; factors such as liability matching, projected life expectancy, and legacy goals always need to be factored into developing dynamic spending models for their clients. — Brian Chasin, MBA, CFO & Cofounder, SOBA New Jersey.
“Such rules may prove inadequate when they are used not as rules, but as rigid prescriptions.”
I would be very careful when offering my opinion on the question of applicability of the 4% rule or some change in the withdrawal rate in the situation, as retirement and investing is not my area of expertise. These matters should be left to experts who understand your personal financial situation.
However, what I have learned from my experience as a lawyer is that people use very basic and simple rules to make decisions at important moments in their lives; And such rules may prove inadequate when they are used not as rules, but as rigid prescriptions.
As a trial attorney, I know well how quickly circumstances can change. It’s very easy for something unexpected to happen: an accident, a dispute at work, family problems, or some other serious situation that can completely disrupt your financial situation.
The same rule applies for any long-term decision also. The formula can serve as an outline of questions to ask, but cannot serve as a substitute for in-depth analysis of each particular situation, as two individuals of the same age may differ significantly in their needs, responsibilities, and risk factors.
The biggest mistake is not when someone decides to take one number over another, but when someone becomes so invested in a basic principle that he or she does not question whether it applies to his or her circumstances. Making good decisions requires adaptability, frequent re-evaluation, and the recognition that perfection does not always exist. — Elliott Jung, Founding Partner at HHJ Trial Attorneys, HHJ Trial Attorneys
“What matters most is not how old you are, but how well you can adjust your spending when investments do not do well.”
The 4 per cent rule is a test, not a rule to follow. It does not promise how much your investments will grow. It is a way to figure out how much you can safely take from your savings at the start of retirement. This amount is based on assumptions about your investments, inflation, how long you will live, and what the market will do. A higher rate like 4.7 percent might work if you have a good mix of investments and a solid plan.
But it is not a guarantee that you can spend that much every year. What matters most is not how old you are, but how well you can adjust your spending when investments do not do well. If you have a steady income to cover your basic needs, you might be able to take more from your savings. But if you are younger and have many years of retirement ahead, you should be more careful. The key is to be flexible and willing to spend less when investments are not doing well. A fixed plan can be clear, but a plan that can change is stronger. It is a good idea to start with the 4 percent rule, then think about your own goals, how long you have, and how much you can afford to spend. — Erin Zadoorian, Co-Founder, Exhalewell
“Different generations are affected differently.”
Rules such as the 4% rule have their use in that they make people pose the proper questions, but I have never really been comfortable with numbers as some kind of guaranteed outcome. Having done my undergraduate studies in Computer Engineering at UC San Diego, I tend to be more comfortable with numbers and assumptions. But life is not an Excel spreadsheet.
The 4% Rule of Bengen and the slightly higher rule of 4.7% suggested by him under certain conditions was a planning number, not a guaranteed number. Markets, inflation, health, taxes and expenses can all influence the result. The same I realized during my tenure of 24 years in CuraDebt. Even two individuals could have similar debt levels but completely different financial scenarios due to different income and circumstances.
When working with individuals who are in debt with consumer debts, tax debts, business debts, and student loans, I learned that there is no single number that solves money issues. This is not different when it comes to retirement planning. A percentage can be used as an opening point, but it does not take into account your particular case.
Different generations are affected differently. Generation Z has more time to grow and has job insecurity. The older generation has less leeway since they will be using what they have already accumulated. In my opinion, all one has to do is understand the principles underlying the rules he follows. A 4 percent withdrawal rate could suit certain individuals and be either too low or too high for others. What is important here is not so much the number itself but rather the reasoning behind this number. I have come to believe even more strongly in this due to my own interest in longevity at EverLife Capital. — Eric Pemper, Managing Member, CuraDebt
“Sustainable withdrawal rates may be closer to 3.7% under certain forward-looking market assumptions.”
The 4% Rule has always been a valuable framework because it gives retirees a simple starting point for thinking about sustainable withdrawals, but it should never be treated as a universal formula. William Bengen’s updated estimate of roughly 4.7% reflects historical data under specific market assumptions rather than a guarantee for future retirement outcomes. Today’s environment includes longer life expectancies, evolving inflation patterns, and greater market uncertainty, making flexibility more important than adherence to a fixed percentage.
Across different age groups, the most successful retirement planning conversations rarely focus on defending a single withdrawal rate. Instead, attention shifts toward income needs, inflation resilience, healthcare costs, tax considerations, and portfolio diversification. Research from Morningstar has suggested that sustainable withdrawal rates may be closer to 3.7% under certain forward-looking market assumptions, highlighting how changing economic conditions can materially affect retirement strategies.
Likewise, studies from the Employee Benefit Research Institute continue to show that many retirees underestimate healthcare and longevity risks. The strongest retirement plans are those that adapt over time rather than rely indefinitely on a single historical rule. — Arvind Rongala, CEO, Invensis Learning
