Yes, Bill Bengen has updated his historical retirement-withdrawal benchmark from about 4% to 4.7%. But before you celebrate and increase your spending, please pause. That number assumes a diversified portfolio, annual rebalancing, inflation-adjusted withdrawals and a 30-year retirement. Your life may look very different.
What you should remember
- Bengen’s 4.7% comes from historical market research.
- Morningstar currently estimates 3.9% using forward-looking assumptions.
- The increase came mainly from better diversification and deeper research—not simply strong recent stock returns.
- Neither percentage is guaranteed.
- A withdrawal rule is a starting point, you still need a financial plan.
In 1994, financial planner William Bengen asked a very practical question: How much could a person withdraw each year without running out of money during retirement?
He studied some of the worst historical markets and tested whether a portfolio could continue supporting withdrawals for at least 30 years.
His original research used mainly U.S. large-company stocks and intermediate-term U.S. Treasury bonds. The result was approximately 4.15%, which the financial world later simplified into the famous “4% rule.”
Here is how the rule works:
Simple? Yes. Complete? No.
Over time, Bengen expanded his research beyond those two original investments. He added smaller U.S. companies, international stocks and Treasury bills. That broader diversification increased his historical benchmark to approximately 4.7%.
This is an important detail. The rate did not increase simply because the stock market recently performed well. Bengen says it increased mainly because the research became more sophisticated and the hypothetical portfolio became more diversified.
In other words, this is not permission to look at your account, multiply it by 4.7% and start spending.
Bengen’s research asks: What withdrawal rate survived the historical periods included in the study?
It cannot tell us with certainty what will survive the next 30 years.
This is where many people become confused.
If Bengen says 4.7% and Morningstar says 3.9%, who is correct?
Potentially both—because they are answering the question differently.
Morningstar’s 2026 retirement-income research estimates a 3.9% starting withdrawal rate for a retiree who wants steady, inflation-adjusted spending over 30 years, with a 90% probability of having money remaining.
Bengen looks backward at actual historical market periods. Morningstar looks forward using current estimates for future investment returns and inflation.
| Rate | How it was calculated | Main assumptions | What it tells us |
|---|---|---|---|
| 4% | Bengen’s original historical research | U.S. stocks and bonds, inflation adjustments, rebalancing and 30 years | A simplified version of the original 4.15% finding |
| 4.7% | Bengen’s expanded historical research | Broader diversification, inflation adjustments, rebalancing and 30 years | The rate survived the historical periods tested |
| 3.9% | Morningstar’s forward-looking model | 30 years, steady real spending, balanced portfolio and 90% success probability | A cautious estimate based on expected future conditions |
Here is the bigger problem: What does “success” mean to you?
A research model may call the plan successful if you finish 30 years with one dollar remaining. You may define success as maintaining your lifestyle, helping your family, paying for care and leaving a meaningful legacy.
Those are not the same goal.
Let us make this practical. These are first-year gross withdrawals before taxes, investment expenses or unexpected costs.
| Portfolio | 3.9% | 4% | 4.7% |
|---|---|---|---|
| $1 million | $39,000 | $40,000 | $47,000 |
| $3 million | $117,000 | $120,000 | $141,000 |
| $5 million | $195,000 | $200,000 | $235,000 |
On a $1 million portfolio, the difference between 3.9% and 4.7% is $8,000 per year. On $3 million, it is $24,000. On $5 million, it becomes $40,000.
That additional income sounds attractive. Of course it does.
But spending more today leaves less room for a bad market tomorrow, higher inflation, healthcare expenses, taxes or a life that lasts longer than expected.
Imagine you have $5 million. The 4.7% formula produces a first-year withdrawal of $235,000. Can you take it? Perhaps. Should you take it? That is a completely different question.
Before deciding, I would want to know about your Social Security, pension, taxes, real estate, family responsibilities, charitable plans and the legacy you want to leave.
A percentage cannot answer those questions.
If you retire at 50, your money may need to last 40 or even 50 years. Bengen’s 4.7% benchmark assumes approximately 30 years. A longer retirement usually requires a lower starting rate.
If most of your wealth is in one company, one industry, one country or one property, your portfolio does not resemble the diversified portfolio behind the research.
More concentration means less room for error.
The withdrawal rate is a gross number. It does not tell you what you can actually spend after federal and state taxes.
It also matters whether the money comes from a taxable account, traditional IRA, Roth IRA or trust. Two families can withdraw the same amount and keep very different amounts after taxes.
The traditional rule continues increasing withdrawals for inflation, even after markets fall.
If most of your spending is fixed—or you know you will not be comfortable reducing travel, gifts or other expenses during difficult years—you may need to begin more conservatively.
A strategy designed merely to avoid running out of money after 30 years may not protect the inheritance, philanthropy or family opportunities you want to create.
This is why I tell families: Your spending rate should reflect your life. Your life should not be forced to fit a percentage.
A real retirement-income plan should test what happens if:
One of the greatest risks is not simply earning a poor return. It is receiving poor returns at the wrong time.
CFA Institute research confirms that losses early in retirement can cause far more damage than the same losses occurring later. Once you begin withdrawing, you may be forced to sell more investments while their values are down. Those assets are no longer there to participate when the market recovers.
That is called sequence-of-returns risk. It is also why averages can be very deceiving.
It is a valuable answer—but it is not your answer yet.
Bengen’s 4.7% represents credible historical research. Morningstar’s 3.9% is more cautious because it uses expectations about the future. Neither number knows your taxes, family, longevity, portfolio or legacy goals.
My professional opinion is simple:
A withdrawal rule tells you where to begin the conversation. A retirement-income plan tells you whether you can sleep well after making the withdrawal.
Bill Bengen has expanded his historical research and now uses approximately 4.7% as his updated benchmark. It is not a universal or guaranteed rate.
A 3.9% starting rate equals $39,000. A 4% rate equals $40,000. A 4.7% rate equals $47,000 before taxes and costs.
Not necessarily. Bengen’s benchmark assumes approximately 30 years. Early retirees should test lower rates and flexible spending strategies.
Morningstar uses forward-looking return and inflation assumptions. Bengen’s 4.7% is based on historical market results and broader portfolio diversification.
Use it as a reference, not an instruction. Taxes, concentrated assets, family obligations, longevity and legacy goals may support a lower or more flexible withdrawal rate.
You worked hard to create your wealth. Now your money has an important job: supporting your life while also protecting the people and purposes that matter to you.
Schedule a conversation with Elaine King, CFP® to create a personalized retirement-income plan based on your spending, investments, taxes and family legacy.
This article is for educational purposes only. It is not individualized investment, tax or legal advice. Historical results and model projections do not guarantee future outcomes.
Elaine King, CFP®, is the founder of Family and Money Matters™. She advises first-time wealth owners, women in transition and families who want to organize, grow and preserve their wealth with purpose.
