Key Insights
$47,000 per year initial withdrawal on a $1 million portfolio, compared to $40,000 under the original 4% rule: an extra $7,000 of annual retirement income.
55% stocks, 40% bonds, 5% cash is the new optimal allocation, replacing the simpler stock-bond split of the original study.
4.1% recommended for early retirees with horizons beyond 30 years, as sequence risk remains the key danger in poor early-return environments.
Inflation is the biggest threat to retirees according to Bengen, driving his focus on small-cap value stocks and intermediate-term government bonds.
Survived every 30-year period in the historical record, including the Great Depression, 1970s inflation shock, and 2008 financial crisis.
Key Metrics
| Metric | Original (1994) | Updated (2025) |
|---|---|---|
| Safe Withdrawal Rate | 4.0% | 4.7% |
| First Revision (2018) | 4.5% | 4.7% |
| Stock Allocation | 50% | 55% |
| Bond Allocation | 50% | 40% |
| Cash Allocation | 0% | 5% |
| Asset Classes | 2 | 7 |
| Retirement Horizon | 30 years | 30 years |
| Early Retiree Rate | ~3.5% | 4.1% |
William Bengen, whose 4% withdrawal rule became a cornerstone of retirement planning, has raised his long-standing estimate of a safe starting withdrawal rate to 4.7%. The revision, published in 2025, reflects updated historical analysis and a broader portfolio mix than the one used in his original 1994 study. For retirees, the change is meaningful: a $1 million portfolio would support an initial annual withdrawal of $47,000 instead of $40,000, with later withdrawals adjusted for inflation.
The update builds on work Bengen had already revised once, when he moved from 4% to 4.5% in 2018. This latest increase suggests that portfolio design matters as much as market returns. His new framework uses a seven-asset-class allocation with 55% in stocks, 40% in bonds and 5% in cash, rather than the simpler stock-bond mix behind the original rule. In Bengen's view, that broader diversification improved outcomes across difficult market periods and lifted the highest withdrawal rate that would have survived every 30-year retirement in the historical record.
That last point is central. The 4.7% figure is not an average outcome or a promise of future success. It is Bengen's "safemax," the highest initial rate that worked across the worst historical sequences, including the Depression, the inflation shock of the 1970s and the 2008 financial crisis. His research found that average sustainable withdrawal rates were much higher, but the headline number is meant to be conservative enough to survive severe conditions.
The new figure also arrives in a different market backdrop than the one retirees faced through much of the 2010s. Bond yields are higher, inflation has reasserted itself as a planning risk, and portfolios have benefited from strong equity markets in recent years. Bengen has called inflation the biggest threat to retirees, which helps explain why his research continues to focus on asset classes with stronger long-term inflation resistance, including small-cap value stocks and intermediate-term government bonds.
Still, the revised rate should not be treated as a universal answer. It assumes a 30-year retirement and a portfolio built along the lines of Bengen's model. Investors planning for longer retirements, especially early retirees, may need a lower starting rate. Bengen has suggested 4.1% for those with longer horizons, a reminder that sequence risk remains the key danger: poor returns early in retirement can do lasting damage, even if markets recover later.
There is also a wider debate about how much retirees can safely spend. Morningstar, using a different methodology, recently estimated a lower starting rate. That gap underscores a broader truth in retirement planning: outcomes depend heavily on assumptions about market returns, inflation, portfolio composition and spending flexibility. A withdrawal rule is a useful benchmark, not a substitute for judgment.
The practical takeaway is straightforward. Bengen's 4.7% revision gives retirees and advisers a stronger starting point than the old 4% rule, particularly for diversified portfolios and standard 30-year retirements. But it works best as part of a plan that is reviewed regularly, not followed mechanically. With inflation, longevity and market conditions still shifting, the future of retirement income will depend less on any single number than on the willingness to adapt.