Is it the 4.7% rule now?

An interesting article at, where they discuss the 4% rule, and is it valid in the 21st century. It helps to address one of the key questions for folks in the FIRE community – do I have enough money now to retire on?

For those who don’t know the history, William Bengen was originally an engineer who, after retiring from his first job, became a financial advisor. He applied his math skills to do an in-depth study in the early 90s on what was the correct percentage of your wealth to withdraw to ensure you could have a good chance on not outliving your money. After going through investments from 1926 (pre-great crash) to 1990, he came up with the rule stating “take your assets and put them in a mixed stock-bond allocation, take 4% each year, starting in year 1,  and increase that by the inflation rate every year. You will be safe for the next 30+ years.”

In fact, he thought you could probably take out 4.5% or even 5%, but 4% was a “safe withdrawal rate.” Since then, folks have replicated the study, and time and time again, the 4% rule has stood.

However, in the current era of low-inflation and low interest rates, many analysts have said that the 4% rule is “too generous” and you should plan to take out only 3%, or even as low as 2.5%. I myself have done some analysis and read some additional articles, and written on it before.

A new article is out on, in it, Bengen states that he’s gone back through the numbers after 30 years, and the number still holds up. He continues to insist that the 4% rule is too conservative. He holds that “Retirees can safely withdraw up to 4.7% a year without threatening to wipe out their retirement savings before 30 years have elapsed.” He claims that the “Skeptics simply do not seem to read all of his research, including updates.”

Bengen believes “that 4.7% plus inflation is a safely sustainable annual withdrawal rate applies to all retirees since 1968.”

My plan is to stick to a 4% safe withdrawal rate. I think that it’s a valid rate to use.

What are your assumptions?

Read more

Mr. 39 Months.

2 thoughts on “Is it the 4.7% rule now?”

  1. I think he is still saying it’s only good for 30 years. Since couples have a pretty good chance of the surviving member hitting 95 then it follows that it assumes you work until you reach the age of 65. I don’t think many of your readers want to do that. I think many of them are looking at 40 or more years of post work life. That makes the rule somewhat problematic for early retirees. I think it would make more sense to run the numbers for 40 and 45 year retirement periods. I don’t worry about it as our withdrawal rate is much lower, under 2%, and I did work until 60.

    1. Congrats on your low withdrawal rate and setup. I agree with your points about 40 – 50 year retirements. I’m still concerned about the market, and I think a lot of FIRE people keep working, even after they hit their “number.” I know I’m still working. Like anything, its best to monitor it as you go along – but I think people need to be less scared about withdrawing funds early in their retirement, only to find in the 80s that they have a lot of money. My mother is still alive at 83, and she is giving money to kids and grandkids like crazy – because she has a lot in savings. At least she and my stepfather traveled a lot and enjoyed themselves in their 60s and early 70s.

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