For three decades, retirees have planned their futures around William Bengen's 4% rule — the guideline that became gospel after his 1994 paper showed a $1 million portfolio could safely fund $40,000 of inflation-adjusted spending for 30 years. Now Bengen himself is rewriting the playbook. In his August 2025 book A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More, he argues that most retirees today should be drawing closer to 5% — and many leave significant money on the table by sticking with 4%.
Key Takeaway
Bengen's updated research raises his "SAFEMAX" — the worst-case safe withdrawal rate over 30 years — from 4.15% to 4.7%. Under today's normal conditions he suggests roughly 5% to 5.5% is appropriate, and historically the average safe rate has been around 7%. The increase comes mostly from broader portfolio diversification, not from a more optimistic view of markets.
How a 4% Rule Became a 5% Rule
When Bengen published "Determining Withdrawal Rates Using Historical Data" in the Journal of Financial Planning in 1994, he tested a simple portfolio: 50% U.S. large-cap stocks and 50% intermediate-term Treasuries. Running that mix through every rolling 30-year retirement period from 1926 forward, he found that even the worst starting year — 1966, the eve of the stagflation era — could survive an initial withdrawal of 4.15% of the portfolio, adjusted upward for inflation each subsequent year. That figure got rounded down to 4%, and the rule was born.
Three decades later, Bengen reran the analysis with two important changes:
- More asset classes. The new model adds U.S. mid-cap, small-cap, and micro-cap stocks, international equities, and Treasury bills on top of the original large-cap stocks and intermediate Treasuries.
- A different mix. The tested allocation is roughly 55% diversified stocks, 40% intermediate Treasuries, and 5% T-bills, evaluated across approximately 400 historical retirement start dates.
That richer diversification was enough to push the historical worst-case starting rate from 4.15% to 4.7%. On a $1 million portfolio, that's the difference between drawing $41,500 and $47,000 in year one — every year, for thirty years, adjusted for inflation. Over a full retirement, the cumulative gap is six figures.
The 4.7% Floor vs. the 5% Recommendation
One of the most misunderstood points in Bengen's new work is what 4.7% actually represents. It is not what he recommends for a typical retiree today. It's the floor — the rate that survives the single worst historical 30-year period, including the brutal 1966 retiree. The average safe withdrawal rate across all the start years in his updated study is closer to 7.1%, and many cohorts could have safely taken 6%, 8%, even 10% without depleting the portfolio.
Important Consideration
The original 4% (and the new 4.7%) is engineered to survive the worst 30-year window in U.S. financial history. If you assume your retirement won't be the worst one ever, you're probably spending too little. Bengen now suggests something closer to 5% as a reasonable starting point under current conditions — and 5.25% to 5.5% for retirees with more flexibility.
Where between 4.7% and 7% should you actually land? Bengen introduces a two-factor adjustment based on conditions on the day you retire:
- Stock market valuations. He uses the Shiller CAPE ratio (cyclically adjusted price-to-earnings). When CAPE is high, future stock returns have historically been lower, so the safe withdrawal rate should be pulled down toward the floor. When CAPE is low, the safe rate can be substantially higher.
- Inflation expectations. Persistently high inflation forces larger nominal withdrawals every year, which accelerates portfolio depletion. Higher expected inflation means a lower safe starting rate.
With CAPE elevated through the mid-2020s, his two-factor framework pulls the recommendation back from the 7% historical average toward roughly 5.5% — still meaningfully higher than the original 4%.
Inflation: "The Greatest Enemy of Retirees"
Bengen has been blunt about which risk worries him most. In recent interviews promoting the book, he has repeatedly called inflation the single greatest threat to retirement security — more dangerous than a market crash. The logic is straightforward: a bear market is temporary and portfolios recover, but inflation compounds permanently. Every year of 6% inflation locks in a 6% larger required withdrawal forever, and unlike a market loss, you never get it back.
This is part of why his new framework adjusts the starting rate based on inflation expectations and why he urges retirees to revisit their withdrawal rate every couple of years rather than treating any number — 4%, 4.7%, or 5% — as a permanent setting.
The U-Shaped Equity Glide Path
Bengen's research also contradicts the old "age in bonds" rule that says you should keep shifting toward bonds as you get older. He endorses what some researchers call a rising equity glide path — sometimes called a U-shape because of how stock allocation moves over a lifetime.
- The five years before retirement: Maintain heavy stock exposure for growth.
- The early years of retirement: Lower the stock allocation to reduce sequence-of-returns risk — the danger that a bad market in the first 5–10 years of retirement permanently cripples the portfolio.
- A decade in: Gradually raise the stock allocation again. Once you've cleared the early sequence-risk zone, longer-term inflation protection becomes the bigger concern, and stocks are the best hedge.
This counterintuitive path is one of what Bengen calls the "free lunches" of his updated framework — improvements in safe withdrawal rates that come from better portfolio mechanics rather than from taking more risk.
How to Apply the New Rule
The mechanics work exactly like the original 4% rule, just with a higher starting percentage:
- Year one: Multiply your starting portfolio by your chosen rate. A $1.2 million portfolio at 5% means $60,000 of withdrawals in the first year.
- Every year after: Take last year's dollar amount and bump it up by actual inflation. If you withdrew $60,000 and inflation runs 3%, you take $61,800 the next year — regardless of what the portfolio did.
- Re-evaluate every two to three years. If markets and inflation have moved significantly, recompute your safe rate. A long bull market may let you spend more; a high-inflation shock may require a temporary cut.
Bengen is explicit that this is not set-and-forget. The original 4% rule got criticized for being too rigid, and his updated framework explicitly bakes in periodic adjustment. For a deeper look at flexible alternatives like guardrails and percentage-of-portfolio methods, see our article on dynamic withdrawal strategies.
When 5% Is Too Aggressive
Bengen's new rate is not for everyone. Several situations call for a lower number:
Very Long Retirement Horizons
The 4.7% and 5% figures assume a 30-year retirement. For early retirees planning 40, 50, or even 60 years of withdrawals — the FIRE crowd — Bengen suggests something closer to 4.3% to keep the math safe across that much longer window.
Inflexible Spending
The higher rate assumes you'll re-evaluate and adjust. If most of your expenses are fixed and you can't realistically cut back during a bad market stretch, the safety margin of the lower 4% number is worth keeping.
Heavy Concentration in One Asset Class
Bengen's 4.7% figure comes from a broadly diversified portfolio. If you're mostly in U.S. large-cap stocks and Treasuries — the original 1994 mix — you should plan around the original 4.15% number, not the updated one.
Extreme Market Valuations
When CAPE is at historic highs and inflation is elevated, the two-factor model dials the recommendation back toward the floor. Starting at 5%+ in a year that looks like 1966 is exactly the scenario the floor exists to protect against.
Warning
Some critics argue Bengen's higher rates lean too heavily on the small-cap premium, which has largely disappeared in U.S. markets since 1980, and that 5.5% may carry materially higher failure risk than the historical analysis suggests. If you're risk-averse or your portfolio outcome has to work, the original 4% is still the more conservative anchor.
A Concrete Example
Consider two retirees, both with $1.5 million portfolios and a 30-year horizon, retiring in early 2026.
Retiree A — Sticks with the Original 4%
- Year-one withdrawal: $60,000
- Inflation-adjusted at 3% per year, reaches $145,775 in year 30
- Total nominal withdrawals over 30 years: roughly $2.85 million
Retiree B — Uses Bengen's Updated 5%
- Year-one withdrawal: $75,000
- Inflation-adjusted at 3% per year, reaches $182,219 in year 30
- Total nominal withdrawals over 30 years: roughly $3.57 million
Retiree B spends about $720,000 more, in nominal dollars, across retirement — without (according to Bengen's research) materially higher risk of running out, as long as the portfolio is properly diversified and the withdrawal rate is re-evaluated periodically. That gap is the cost of treating 4% as a permanent law rather than a floor.
Using Bullseye to Stress-Test Your Number
The new rule is more nuanced than the old one, which makes a year-by-year projection more valuable than ever. Bullseye's retirement withdrawal planner lets you put Bengen's framework to work on your own numbers:
- Test 4% vs. 5% directly. Run the same plan at both withdrawal levels through age 95 and see how end-of-life balances, taxes, and Social Security interactions compare.
- Layer in a bad early decade. Use the Scenarios feature to model a market crash in your first years of retirement and see whether the higher rate still survives a 1966-style sequence.
- Model an inflation shock. Add a multi-year period of elevated inflation and watch how it cascades through your withdrawal needs, RMDs, IRMAA brackets, and Social Security taxation.
- Check tax efficiency. A higher gross withdrawal is only valuable if you keep most of it. Coordinate spending across taxable, tax-deferred, and Roth accounts to see whether the 5% withdrawal still funds the same after-tax lifestyle.
For broader context on how today's economic environment is reshaping retirement targets, see our companion piece on whether the 4% rule still holds up — the two articles look at the same question from opposite directions.
Bottom Line
The man who invented the 4% rule now thinks it was too conservative. His updated research supports a 4.7% floor and a roughly 5% recommendation under today's conditions — driven by broader diversification, not riskier assumptions. Treat it as a starting point: pick your rate based on your time horizon and current valuations, watch inflation carefully, and re-evaluate every couple of years. Most retirees who have rigidly stuck with 4% have been spending less than they safely could.
