4% Rule
What is 4% Rule?
A guideline that withdrawing 4% of savings in the first year of retirement, then adjusting for inflation, has historically lasted about 30 years.
Understanding 4% Rule
The rule comes from research by financial planner William Bengen in 1994, using historical U.S. stock and bond returns. It implies saving about 25 times your yearly spending gap.
It is a starting point, not a guarantee: longer retirements, weaker future returns, or high fees may call for a lower rate, while flexible spending makes plans more resilient.
Example
To withdraw $40,000 a year, the rule suggests a portfolio of about $1,000,000.
In 2026
Morningstar's annual research puts the safe starting withdrawal rate for people retiring in 2026 at about 3.9%, up from 3.7% the year before. That assumes a 30-year retirement, a 90% chance of not running out of money, and a portfolio with 30% to 50% in stocks.
The research also finds that retirees who are willing to adjust spending in bad years can start higher. Morningstar's UK study puts its base case at 4.1%.