The 4% Rule: What the Research Actually Says

The 4% rule is a guideline for how much you can spend from savings in retirement. You withdraw 4% of your portfolio in the first year, then raise that dollar amount with inflation every year, regardless of markets. Historically, that pattern lasted at least 30 years in almost every period. With $1,000,000, it means $40,000 in year one. Run your own numbers in the 4% rule calculator.

How does the 4% rule work in practice?

You set your spending once, at the start, and then ignore the portfolio's ups and downs. Say you retire with $1,200,000. Year one, you withdraw 4%, or $48,000. After that you stop looking at the percentage and only adjust the dollar amount for inflation. If prices rise 3% a year, you take $49,440 in year two, $62,629 in year ten and $113,115 in year thirty.

Those later withdrawals buy the same groceries and rent as the first one did, which is the whole point. It also means that after a crash you keep withdrawing the same real amount from a smaller balance, so your effective rate climbs. That is the scenario every test below is really measuring.

Run in reverse, the rule tells you how much to save: divide your yearly spending by 0.04, or multiply it by 25. Spending $60,000 a year from your portfolio needs $1,500,000. That target is often called your FIRE number; our guide on how to calculate your FIRE number covers the adjustments for Social Security, pensions and taxes.

The math behind the 4% rule

Why 4% and not 2% or 8%? Picture a portfolio that earns the same return every year. Withdrawing 4% a year, rising with inflation, and running out after exactly 30 years only requires a steady return of 1.31% a year after inflation. To last 40 years, it needs 2.68%. Those are low hurdles next to history: a 60/40 mix of US stocks and Treasuries returned 5.1% a year after inflation from 1928-2025 in our data^[10].

So if average returns were all that mattered, 4% would be very safe. They are not. The order of returns matters as much as the average, because a withdrawal taken during a crash sells assets at low prices, and those assets are not there for the recovery. Michael Kitces found that the real return in the first 10 years of retirement explains most of the difference between safe withdrawal rates, with a correlation of about 0.79^[12]. This is sequence-of-returns risk, and it is why the start years that failed are bunched together, as the backtest below shows.

Where did the 4% rule come from?

The rule comes from financial planner William Bengen. In 1994 he tested withdrawals against US market history, using Ibbotson data from 1926 on and, for illustration, a portfolio of 50% common stocks and 50% intermediate-term Treasuries. A 4% first-year withdrawal, raised for inflation, never ran out in less than 33 years. A 4.25% withdrawal could fail in 28 years, while 3% to about 3.5% always lasted at least 50^[1].

Bengen's conclusions went further than the number. He called an initial 5% risky and 6% or more "gambling". He found that 50% to 75% stocks gave the best results and that less than 50% was counterproductive. And he noted that his clients held their money in tax-deferred accounts, so taxes were left out^[1]. He later coined the term SAFEMAX for the highest rate that lasted at least 30 years in every historical period^[3].

In 1998, three professors at Trinity University extended the test to 1926-1995, using the S&P 500 for stocks and long-term high-grade corporate bonds, with payout periods of 15 to 30 years. A retirement counted as a success if the money never hit zero, and the study did not adjust for taxes or transaction costs^[2]. Their inflation-adjusted, 30-year results are the most cited numbers in retirement planning:

The Trinity authors themselves called 3% and 4% "exceedingly conservative" for stock-dominated portfolios^[2]. Bengen has since raised his own number. In his 2025 book A Richer Retirement he raised his estimate from 4.15% to 4.7%, after adding small, mid and micro-cap US stocks and international stocks to the portfolio^[4].

Does the 4% rule still hold? Our 1928-2025 backtest

Yes for 30 years, and much less so beyond that. We re-ran the test ourselves on 1928-2025 data, including the 30 years since Trinity's data ended. At 4% with a 60/40 portfolio, 94% of 30-year retirements survived (4 of 69 start years failed). Stretch the horizon to 50 years and success falls to 76%; at 60 years it is 67%.

How we calculated it

• Data: Aswath Damodaran's annual returns^[10]: S&P 500 total return for stocks, 10-year US Treasury total return for bonds, and December-to-December CPI-U for inflation.
• Method: start with any balance, withdraw the stated rate at the start of year one, then the same inflation-adjusted amount at the start of every later year. The portfolio is rebalanced to its stock/bond mix annually. Returns are replayed in their actual order.
• Cohorts: every start year with a complete history: 69 start years for 30 years (1928-1996), 59 for 40, 49 for 50 and 39 for 60.
• Success: the withdrawal was fully paid in every year of the horizon. No fees, taxes or Social Security; raw history with no return adjustment. The code is the same engine our calculators use, documented on the methodology page.

Two things stand out. More stocks helped over long horizons: at 3.5% for 50 years, 80/20 survived 98% of the time against 92% for 60/40. And failures cluster in time. At 4% over 30 years with 60/40, the only retirements that ran out began in 1965, 1966, 1968 and 1969: just ahead of the high inflation of the 1970s, which hurt bonds and stocks at the same time.

How long will your money last with the 4% rule?

At least 30 years in most of history. In 43 of 69 start years, a 60/40 portfolio still held more, after inflation, at the end of 30 years than it started with. The table shows how long 4% lasts if returns were steady instead of volatile. Real markets are not steady, which is why the worst historical start year for a 50-year retirement at 60/40 ran out after 25 years.

Our calculation, withdrawals at the start of each year. To test your own balance and spending against every historical period, use the savings longevity calculator.

How does the 4% rule fare over 40, 50 and 60 years?

Not well enough to rely on. The rule was designed for 30 years, and the tables above show what happens beyond that: at 4% and 60/40, success fell from 94% at 30 years to 67% at 60. Another way to see it is the highest rate that never ran out:

In our data the fail-safe rate drops from 3.70% at 30 years to 3.20% at 60 for a 60/40 portfolio. Karsten Jeske's research at Early Retirement Now, with data back to 1871, found that a 4% rule with a 50/50 portfolio had about 95% success over 30 years but only about 65% over 60 years^[5]. He warns that 30-year results should not be stretched to longer retirements when the money is allowed to run down to zero^[6], and concludes that 3.25%-3.5% survived the worst historical conditions over 50-60 years^[8].

Why the drop? A longer retirement has more time for a bad decade to arrive early, and the money has to keep paying for decades afterward. Bonds alone cannot carry that load: Jeske notes that bonds returned only about 2.6% a year after inflation since 1871^[6], which fits our finding that more stocks helped in the 50- and 60-year tests. If you plan to retire in your 40s or early 50s, find the rate for your own horizon with the safe withdrawal rate calculator, or run your full plan in the early retirement calculator. Our step-by-step plan for retiring at 55 shows how to bridge the years before Social Security.

Does the 4% rule work today?

Probably, with less margin than history suggests. Morningstar's latest analysis puts the safe starting withdrawal at 3.9% for a 30-year retirement with 90% success and 30%-50% in stocks, up from 3.7% the year before^[9]. Its estimate is built on forward-looking return and inflation assumptions, and it has moved between 3.3% (2021) and 4.0% (2023). Forecasts are the main reason for caution: Vanguard expects US stocks to return 4.8%-6.8% a year over the next decade^[11], below the long-run average.

Valuations matter because they hint at what the crucial first decade might bring. Jeske found that every failure of the 4% rule over 30 years began when the Shiller CAPE ratio was above 15, and that 10-year real stock returns averaged below -1% after a CAPE above 30^[7]. Geography matters too. Wade Pfau tested 17 developed countries and found a 4% real withdrawal would have been safe over 30 years in only 4 of them, the US among them^[3]. The 4% rule is a product of an unusually good market.

Variations of the 4% rule

The original rule is deliberately rigid: the same real withdrawal every year, whatever happens. Most improvements make spending respond to markets, which lets you start higher or sleep better.

Guardrails (Guyton-Klinger)

Guardrail rules cut your dollar withdrawal by 10% when your current withdrawal rate rises 20% above where it started, raise it by 10% when the rate falls 20% below, skip the inflation raise after a year with a negative return, and allow no cuts in the final 15 years^[13]. In our engine, starting at 5% on a 60/40 portfolio, guardrails lasted 30 years in 100% of start years, against 72% for fixed withdrawals. The price was spending: a retiree who started in 1968 saw withdrawals fall from $50,000 to as low as $19,203 a year, a 62% cut in real terms.

That is not a quirk of our model. An analysis on Kitces.com reports that a 1966 retiree starting at 4% would have had to cut withdrawals to $16,400 a year, 59% below plan, and proposes "risk-based" guardrails instead^[13]. Guardrails work, but only if you can genuinely live on much less for years. Try them with your own numbers in the how long will my savings last calculator, which has a guardrails mode.

Small, early cuts

You don't need a formal system to benefit from flexibility. Bengen showed that a 1929 retiree who trimmed withdrawals by just 5% after the crash would have had 20% more wealth by 1949^[1]. Morningstar estimates that retirees willing to let spending fluctuate can start near 6%, against 3.9% for fixed spending^[9].

A fixed percentage of the current balance

Instead of raising last year's withdrawal with inflation, you can withdraw the same percentage of whatever the portfolio is worth each year. You can never run out, because you always take a fraction of what is left, but your income rises and falls in step with the portfolio. It suits retirees whose essential costs are covered by Social Security or a pension.

Valuation-based rules

Some planners set the starting rate from market valuations: lower when stocks are expensive, higher when they are cheap. The logic comes from the CAPE findings above^[7]. These rules still need a fallback for the years when cheap markets get cheaper.

How can you make the 4% rule safer?

• Start at 3.25%-4% depending on your horizon; use the safe withdrawal rate calculator for the exact figure.
• Keep a stock-heavy mix (60%-80%) for long retirements, as both our tables show, if you can hold it through a crash.
• Keep fees low. At 1% a year, a 4% withdrawal asks your portfolio for roughly 5%.
• Skip the inflation raise after a down year, or adopt guardrails you can actually live with.
• Delay Social Security to shrink what the portfolio must pay later.

When not to use the 4% rule

The rule is a starting point for one kind of retiree. It fits poorly when your situation differs from the one it was tested on:

• You retire before about 55. A 40-60 year retirement needs a lower rate, as shown above.
• You want to leave the full balance to heirs. The studies count a retirement as a success with a single dollar left. Jeske found that with 100% stocks and 4% over 30 years, success fell from 97% to 80% once the starting capital had to be preserved^[6].
• Social Security or a pension starts years after you retire. Your portfolio pays more in the early years and less later, so one flat rate misstates what you need. Model the gap year by year instead.
• You hold mostly bonds or cash, or pay high fees. Both lower returns every year, and the rule assumed a balanced portfolio with no costs.
• Your money is mostly outside the US. Other markets had weaker histories^[3].
• You are older or have a shorter horizon. Then 4% is probably too low. Morningstar notes that older retirees can reasonably spend well more than its 30-year rate^[9].

4% rule research compared