Safe Withdrawal Rate

How much can you spend each year without running out of money? The safe withdrawal rate (SWR) is the answer, and it's more nuanced than "just use 4%."

Last updated: Aug 2026

Quick answer

A safe withdrawal rate is the percentage you can withdraw from your portfolio in year one of retirement, then adjust for inflation, with low risk of running out. The 4% rule is a common starting point, but longer retirements and higher valuations often require lower rates like 3% to 3.5%.

What is a safe withdrawal rate?

Your safe withdrawal rate is the percentage of your portfolio you can withdraw in year one of retirement, then adjust for inflation each year, with a high probability of not running out of money over your retirement.

Example: 4% SWR on a $1,000,000 portfolio

$40,000 / year

Adjusted for inflation each subsequent year

The 4% Rule

In 1994, financial advisor William Bengen analyzed historical returns going back to 1926 and found that a 4% initial withdrawal rate survived every 30-year period in U.S. history. The Trinity Study (1998) confirmed similar findings.

What it assumes

• 30-year retirement
• U.S. stock/bond portfolio (50/50 to 75/25)
• Inflation-adjusted withdrawals
• No flexibility in spending

What it doesn't cover

• Retirements longer than 30 years
• Non-U.S. market history
• Taxes and fees
• Variable spending patterns

Is 4% still safe?

It depends on your situation. The 4% rule is a reasonable starting point, but not a universal answer:

Longer retirements need a lower rate. Retiring at 40 means your money may need to last 50+ years. Most researchers suggest 3.25-3.5% for early retirees.

High valuations may mean lower future returns. When the CAPE ratio is elevated, some research suggests starting at 3-3.5%.

Flexibility adds safety. If you can cut spending in bad years, even 4.5-5% can work. Dynamic strategies like Guyton-Klinger build this in.

Alternatives to the 4% rule

Variable Percentage Withdrawal

Withdraw a fixed percentage of your current balance each year. Spending adjusts automatically with market performance. You can never run out, but income varies.

CAPE-Based

Adjusts the withdrawal rate based on market valuation (CAPE ratio). Spend less when markets are expensive, more when they're cheap.

Guyton-Klinger guardrails

Start with a fixed rate but add "guardrails", if your withdrawal rate drifts too high or low relative to your portfolio, you adjust spending. Balances stability and safety.

Floor / Ceiling

Set minimum and maximum annual spending bounds. Provides a safety net while allowing upside when markets do well.

RetireNumber supports all of these strategies. Compare them in detail →

Test your withdrawal rate

Enter your number and choose a strategy. RetireNumber backtests it against 95+ years of history and runs Monte Carlo simulations so you see the actual survival rate, not just a rule of thumb.

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Next step: test your withdrawal rate

Use the retirement number calculator to set your baseline, then backtest and run Monte Carlo simulations to see real survival odds.