If you’re hoping to follow that model, or even if you’re aiming for a traditional retirement, new research<\/a> indicates that you may be able to withdraw more from your portfolio each year \u2014 or build a smaller stash overall \u2014 than previously thought. <\/p>\n For years, financial planners and early retirees alike<\/a> have relied on the so-called “4% rule” as a guideline. The rule, which says it’s generally safe to withdraw 4% of a balanced portfolio annually, adjusted for inflation, for a 30-year retirement was first described in a 1994 paper<\/a> published in the Journal of Financial Planning by financial advisor Bill Bengen. <\/p>\n Bengen’s new book expands on his original research and, as a result, adjusts the safe withdrawal rate upward. For those still planning to take out 4% of their portfolio in retirement, “I think they’re cheating themselves a little bit,” he tells CNBC Make It.<\/p>\n Bengen’s new default safe withdrawal rate for a 30-year retirement: 4.7%. And that number can go higher \u2014 even for early retirees \u2014 during periods of low to moderate inflation, he says.<\/p>\n Arriving at the 4.7% rule<\/p>\n Bengen arrived at his estimates through backward-looking data dating to 1926. Essentially, he says he wanted to find out what percentage of retirees’ portfolios could be taken out each year, historically, with no one in his data set running out of money. <\/p>\n Back in 1994, Bengen made a few assumptions. He assumed that historical investors had their savings in a tax-advantaged retirement account with 60% in U.S. large-company stocks and 40% in intermediate-term U.S. government bonds. He assumed the investor rebalanced to these allocations once per year. And he assumed that the investor would withdraw a certain percentage at the beginning of retirement and adjust the withdrawal for inflation, similar to the way Social Security does it, each following year. <\/p>\n Putting those assumptions to work, he found that an initial withdrawal rate of 4.1%, adjusted for inflation thereafter, would see no historical investor run out of money over the course of a 30-year retirement. Thus, the 4% rule was born.<\/p>\n Bengen made a few adjustments in his latest research to better reflect the asset mix that investors hold in retirement. He now assumes a portfolio with 55% in stocks, 45% in bonds and 5% in cash in the form of T-bills. Within that stock allocation, he includes large, midsize, small and micro-size company U.S. stocks, as well as some international exposure. <\/p>\n The result: Under the historical worst-case scenario (one with high inflation and an unfavorable stock market) the investor can safely withdrawal 4.7% in retirement without running out of money for 30 years. For a 50-year retirement, it’s closer to 4.2%. <\/p>\n You may be able to safely withdraw even more, depending on conditions in the economy and stock market at the time you retire, Bengen finds. <\/p>\n Your personal number may be higher, Bengen says, during periods when stocks aren’t too richly valued and when inflation is at low to moderate levels. But you’ll have to be vigilant \u2014 bear markets or periods of high inflation, especially at the outset of your retirement, could either force you to take more modest withdrawals or increase the risk that you’ll run out of money, Bengen says. <\/p>\n “My research shows that if you endure a substantial bear market early in retirement, it drives down your withdrawal rates, because it sucks a lot out of the portfolio at the same time that you’re drawing from it,” Bengen says.<\/p>\n The rate of inflation<\/a> can also play a role in deciding how much to withdraw. Rapidly rising costs deplete the buying power of your savings, which, in turn, may force you to either withdraw more money or cut back on expenses \u2014 or both \u2014 in retirement, Bengen says. <\/p>\n No two investors’ withdrawal strategies will be exactly the same, and keeping tabs on these factors can be tricky, Bengen says. For those reasons, you’d be wise to discuss your retirement plans, early or otherwise, with a financial professional.<\/p>\n And no matter what type of retirement you’re planning for, it’s smart to err on the conservative side with your planning, Bengen says. <\/p>\n “You don’t know what the market or inflation could do. You don’t know how long you’ll live. [You] really don’t know what your expenses will be like 30 years from now,” he says.<\/p>\n Want to give your kids the ultimate advantage?\u00a0Sign up for CNBC’s new online course,\u00a0How to Raise Financially Smart Kids<\/a>. Learn how to build healthy financial habits today to set your children up for greater success in the future. Use coupon code EARLYBIRD for 30% off. Offer valid from Dec. 8 to Dec. 22, 2025. Terms apply.<\/p>\n Plus, sign up for CNBC Make It’s newsletter<\/a> to get tips and tricks for success at work, with money and in life, and request to join our exclusive community on LinkedIn<\/a> to connect with experts and peers.<\/p>\n![\"I](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2025\/12\/1766088488_447_108225591-thumbop.jpg\")
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