The 4% rule: what it means

A rule of thumb from William Bengen’s 1994 research: withdraw 4% of the portfolio in year one of retirement, then raise that amount with inflation each year.

Also called: Four percent rule, Bengen rule.

A short definition, on purpose. Whether 4% is still “safe,” and what changes if you retire at 40, is the job of the research post — not of this page.

Research on this

See also

  • Safe withdrawal rate — The share of a portfolio’s starting value you can withdraw in year one of retirement, then raise with inflation each year, without running out over your horizon.
  • Guardrails (Guyton-Klinger) — A withdrawal policy that starts from fixed spending, then cuts it when the withdrawal rate breaches an upper band and raises it when it falls below a lower one.
  • Sequence of returns risk — The risk that the order in which investment returns arrive damages a plan, even when the average return is unchanged. It matters most when money is being withdrawn.
Run the 4% rule calculatorBack to the glossary