The most talked-about retirement rule of thumb just got a serious update. Bill Bengen, the financial planner who popularized the now-legendary “4% rule,” has revisited his calculations. His latest research suggests retirees might safely withdraw closer to 4.7%—and perhaps even 5% or more—under the right conditions.
It’s the kind of finding that makes soon-to-be retirees breathe a sigh of relief. But here’s the catch: even this updated figure isn’t meant to be a magic number. It’s a guidepost. Real-world retirement isn’t just about the math—it’s about flexibility, timing, and personal goals.
Why the 4% Rule Became a Classic
When Bengen first introduced the rule in the 1990s, it was hailed as an elegant solution to a messy problem: how much can you safely withdraw from your retirement savings without running out of money?
The appeal was instant. If you could live off 4% of your portfolio annually, adjusted for inflation, you were considered financially independent. The calculation offered simplicity in a world of uncertainty.
But the simplicity was also the limitation. It assumed a 30-year retirement, a specific portfolio mix (U.S. stocks and bonds), and a willingness to spend down to zero. Over time, the 4% rule was treated more like gospel than what it really was: a historically informed estimate.
A Richer Framework
In his new book, A Richer Retirement, Bengen revisits his original analysis with a broader lens. Instead of limiting his work to three asset classes, he models seven, including international equities and real estate. He also factors in market valuations, inflation cycles, and different withdrawal strategies.
The result? A revised “Universal SAFEMAX” withdrawal rate of 4.7%, which he still considers conservative. But in certain market conditions, Bengen believes a rate as high as 5.25%–5.5% may be sustainable.
That’s good news for retirees. But it also comes with a warning: history doesn’t guarantee the future.
The Eight Elements That Matter
Bengen emphasizes that safe withdrawal rates aren’t carved in stone—they depend on multiple factors, which he calls the “Eight Elements.” Add to those inflation and market valuation, and you’ve got the ten key drivers of retirement sustainability.
Here are the Eight Elements to think about:
- Withdrawal method – Fixed-dollar withdrawals create stability, while inflation-adjusted ones protect purchasing power.
- Retirement horizon – Thirty years might not be enough anymore; many people live 35–40 years past retirement.
- Account type – Withdrawals from tax-deferred, Roth, or taxable accounts all carry different implications.
- Legacy goals – If you want to leave money behind, withdrawals must be lower.
- Asset allocation – The mix of stocks, bonds, real estate, and alternatives directly affects resilience.
- Rebalancing discipline – Adjusting portfolios back to their targets keeps risk in check.
- Management style – Passive indexing, active strategies, or alternatives all come with trade-offs.
- Withdrawal timing – Monthly, quarterly, or annual withdrawals may alter results, especially in volatile markets.
These elements prove one thing: withdrawal planning is a dynamic process, not a static number.
Inflation and Market Valuation: The Wild Cards
If there’s one lesson from the past century, it’s that inflation and market conditions at retirement matter more than any rule of thumb.
Take the 1970s, for instance. Retirees faced high inflation and poor returns—a toxic combination that wrecked even cautious plans. Inflation eroded purchasing power so quickly that even modest withdrawals weren’t sustainable.
Today, the challenge may be different but no less concerning. Stock market valuations are historically elevated, which could mean lower-than-average returns ahead. Starting retirement in an overvalued market makes even 4.7% riskier than it looks on paper.
That’s why Bengen warns: the SAFEMAX is “historically safe,” not future-proof.
Why 4.7% Isn’t Your Personal Number
The appeal of a higher withdrawal rate is obvious. More money for travel, hobbies, or simply peace of mind. But context matters.
Consider these two retirees:
- Dominique wants to leave $500,000 to her children. To preserve her legacy, she chooses a cautious 3.5% withdrawal rate, treating any upside as a bonus.
- Damien plans to front-load his retirement with travel. He starts closer to 5%, but he knows he’ll need to scale back if markets disappoint.
Both strategies are valid because both reflect personal goals. The lesson: your “number” depends on your lifestyle, your priorities, and your willingness to adapt.
Guidepost, Not Goalpost
Here’s the risk: treating a rule of thumb as if it were Newton’s law. Bengen himself is clear on this point:
“The so-called 4% rule is not an immutable law, like Newton’s Laws of Motion… I consider myself more as a reporter of what has occurred in the past than as a Nostradamus prophesying what will occur in the future.”
In other words, treat the rule as a guidepost, not a goalpost. Use it to orient yourself, but don’t let it box you into rigidity.
Flexibility: The True Retirement Superpower
The retirees who succeed financially aren’t the ones who pick the “perfect” number—they’re the ones who stay flexible.
- Cut spending slightly during down markets.
- Revisit your plan every year or two.
- Adapt to changes in inflation, healthcare costs, and lifestyle choices.
Rigidity is what breaks retirement plans. Flexibility is what keeps them intact.
Tools to Navigate Retirement Planning
Bengen suggests retirees take advantage of modern tools that stress-test portfolios against different scenarios. Apps like Big Picture let you model different withdrawal rates, asset mixes, and time horizons. While no tool can predict the future, they help visualize risk and prepare you for contingencies.
Beyond software, retirees should maintain a disciplined review cycle. A withdrawal rate chosen at 65 shouldn’t remain untouched at 75 or 85. Regular reviews, ideally with a financial advisor, turn theory into resilience.
The Bottom Line
The 4% rule changed the way we think about retirement. Now, decades later, it’s getting a thoughtful upgrade. Bengen’s research suggests that 4.7%—or even more—might be sustainable for many retirees. But the true lesson isn’t the number itself.
It’s this: no formula can replace a flexible, personalized strategy. The best retirement plans are living documents—responsive to inflation, market cycles, and your own evolving priorities.
So yes, take comfort that the math may allow you to spend a little more. But don’t mistake a percentage point for certainty. Use it as a guidepost, not a guarantee.
Plan wisely. Review often. Stay flexible. That’s how you turn a rule of thumb into a retirement plan that actually lasts.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
