If you have read anything about retirement spending, you have met the 4% rule. The idea, in plain terms: in your first year of retirement you withdraw 4% of your nest egg, and each year after that you increase that dollar amount for inflation. Do that with a balanced stock-and-bond portfolio, the theory goes, and your money should last about 30 years. Three decades after it was introduced, the rule is under fresh scrutiny -- and, interestingly, the experts disagree in opposite directions.
Where the rule came from
The rule traces to financial planner William Bengen, who in 1994 tested how much a retiree could have safely withdrawn through every historical 30-year window, including the brutal ones. He found that even a retiree who started in October 1968 -- straight into a bear market followed by 1970s inflation -- could have sustained about a 4.15% inflation-adjusted withdrawal. The 1998 Trinity study, by three professors at Trinity University, reached broadly similar conclusions using historical stock and bond data, and the '4% rule' name stuck.
Bengen's own update: 4.7%
Bengen himself now argues the safe number is higher. In his 2025 book A Richer Retirement, he raises what he calls the 'Universal SAFEMAX' to 4.7%, as reported by Advisor Perspectives and Boldin. The reason is diversification: by adding small-cap and international stocks to the original two-asset mix, that worst-case October 1968 retiree could have safely started at 4.7% rather than 4.15%. CNBC's coverage of the book underscores Bengen's central warning, though -- he calls inflation the retiree's 'greatest enemy,' because it is the inflation adjustment, not the market, that does the most damage to a withdrawal plan.
Morningstar's update: closer to 3.7%-3.9%
Now the twist. Morningstar's annual State of Retirement Income research lands lower than Bengen, not higher. For 2025, Morningstar's base-case safe starting withdrawal rate was 3.7%, and for 2026 it ticked up to about 3.9%, according to Morningstar's reports. The difference in approach explains the difference in answer: Bengen looks backward at U.S. history, while Morningstar runs forward-looking Monte Carlo simulations that build in today's elevated stock valuations and bond yields, which imply lower future returns over the next 30 years.
It helps to see the current market backdrop both camps are reacting to. Per FRED, the 10-year U.S. Treasury yielded roughly 4.5% in mid-2026 -- a real source of bond income that didn't exist in the near-zero-rate 2010s. At the same time, data tracked by Multpl shows the S&P 500's dividend yield near 1.1%, reflecting historically high stock prices. Higher bond yields help future returns; rich stock valuations hurt them. Morningstar's models weigh both and arrive at a cautious starting figure.
So who is right?
Both, in a sense -- because they answer different questions. Bengen's 4.7% is the historical maximum that would have survived the single worst start date in U.S. records; it is an optimistic 'what was the worst the past ever threw at us' figure. Morningstar's ~3.9% is a conservative 'what do current conditions suggest going forward' figure aimed at a high probability of success. The honest summary is that the prudent starting range for most retirees today sits somewhere between roughly 3.7% and 4.7%, and where you land depends on your flexibility, time horizon, and tolerance for risk.
The flexibility lever
The most useful finding for real retirees is that rigid spending is what makes the rule fragile. Morningstar's research shows that dynamic strategies -- trimming withdrawals after bad market years and allowing modest raises after good ones -- can lift a sustainable starting rate to roughly 5% without meaningfully raising the risk of running out. In other words, a retiree willing to skip the inflation raise in a down year buys themselves a higher baseline. Sequence-of-returns risk -- the danger of a market crash early in retirement -- is exactly what flexibility defends against.
That is also where the order you tap your accounts matters. Drawing from the wrong account at the wrong time, or selling stocks into a downturn, can quietly shorten how long your money lasts. You can model different drawdown orders and see how they affect longevity with our <a href="/calculators/withdrawal-sequencing">Withdrawal Sequencing calculator</a>, which lets you test a flexible plan against a rigid one side by side.
The bottom line
The 4% rule still holds as a sensible starting point -- it has simply gained guardrails. Use roughly 4% as your anchor, recognize that Bengen's history supports up to 4.7% while Morningstar's forward-looking math counsels closer to 3.9%, and build in the willingness to flex your spending when markets misbehave. A plan that bends in bad years is far more durable than one that insists on the same inflation-adjusted raise no matter what the market does.
This article is educational and not personalized financial advice. All investing carries risk and past performance does not guarantee future results. Consider consulting a fiduciary financial advisor about your situation.