Dec 26, 2025
When it comes to spending in retirement, financial advisers and investment experts have long clung to the golden 4% rule as gospel — that retirees can safely withdraw 4% of their retirement account in the first year, and adjust that percentage for inflation annually, providing adequate income for about 30 years.
However, the rule now appears to be approaching its own retirement. That’s according to William Bengen, the financial planner who popularized the rule back in 1994.
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In a September 2025 interview with USA Today, he said he has updated the rule because “my research has gotten more sophisticated.” (1)
The encouraging news for retirees is that the days of rigidly living off just 4% (give or take) of your portfolio each year may be over. The rule was built for a very different economic environment — one defined by high bond yields and steady market growth.
Today’s research, including updates from Bengen himself, suggests retirees can safely withdraw more. Here’s why.
Why the 4% rule is outdated
To understand why the 4% rule is outdated, it’s important to understand the climate in which it was first created.
Back in 1994, Bengen used 30-year historical returns on the stock and bond market to calculate a withdrawal rate that would minimize the chances of depleting funds within a 30-year window.
As you can imagine, the 30 years preceding the 1990s were a completely different era than today. Bond yields reached as high as 15% in the 1980s (2) and the stock market wasn’t dominated by tech giants the way it is today.
Investors were also more conservative and had limited opportunities to diversify their portfolios beyond traditional assets like stocks and bonds.
With that in mind, Bengen decided to update his research. His recently published book, A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More, proposes a 4.7% rule of thumb for withdrawals. He calls it a “Universal Safemax” rate.
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This updated and more generous rule is based on recent returns for seven asset classes, including U.S. large-cap, mid-cap, small-cap and micro-cap stocks, international stocks, U.S. intermediate-term government bonds and U.S. Treasury bills.
Since the rate is higher, Bengen believes it allows retirees to more effectively deal with persistent inflation and the higher cost of living in 2025.
The new rate should also give many Americans who are on the verge of retirement some additional breathing room.
According to the Federal Reserve’s latest Survey of Consumer Finances in 2022, Americans between the ages of 55 and 64 have a median retirement balance of just $185,000. (3)
A withdrawal rate of 4.7% allows a retiree with median savings to tap into roughly $8,700 in the first year, with the rest hopefully covered by Social Security.
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However, Bengen also offers two caveats: the new rule is not static or a one-size-fits-all solution.
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Consider personalized and dynamic withdrawals
Bengen’s recommended 4.7% withdrawal rate is a broad average. That means it may or may not fit your personal circumstances.
For instance, if you have a hefty retirement portfolio, the 4.7% withdrawal rate may be too excessive. A lower withdrawal rate could help you meet all your needs while leaving a sizable legacy for your family after you pass.
On the other hand, if you have a chronic illness and don’t expect to live into your 90s, you could consider a higher rate. After all, the 4.7% rule is based on a 30-year window and if your retirement is expected to be shorter than that you have more room to spend every year.
It’s also worth remembering that these rules of thumb — whether 4% or 4.7% — are just starting points for your retirement. A strict withdrawal amount every year doesn’t allow you to adapt to changing life circumstances and market conditions.
This is why Vanguard suggests a dynamic withdrawal strategy. You can plan your retirement around a specific rate — say, 4.7% — but you should consider a rate floor and ceiling, giving yourself a range to play within based on market performance and inflation.
So, if the stock market has an exceptional year with great returns, you could withdraw less to minimize the tax burden. And if inflation is particularly bad one year, you could raise your withdrawal rate to maintain your standard of living. A dynamic withdrawal strategy could help you optimize your retirement plan.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
USA Today (1); Federal Reserve Bank of St. Louis (2); Board of Governors of the Federal Reserve System (3).
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
