Bill Bengen, the creator of the 4% rule, joins us to revisit one of the most important ideas in financial planning and retirement research. In this conversation, he explains the origins of the 4% rule, how his thinking has evolved over 30 years, and why he now believes retirees can safely withdraw closer to 4.7% — or even more — under certain conditions. We explore the data behind his findings, how to think about inflation, valuations, longevity, and sequence of returns risk, and the philosophy of living well in retirement.
Topics covered:
The origins and evolution of the 4% rule
How Bill discovered the worst-case retirement scenario (1968)
The role of inflation and market valuations in withdrawal rates
Why he now recommends 65% equities instead of 55%
How diversification increases sustainable withdrawals
The logic behind a U-shaped equity glide path
Sequence of returns risk and how to mitigate it
Thoughts on the permanent portfolio and gold
Bucket strategies and cash reserves
Dynamic vs. fixed withdrawal methods
How longevity and FIRE affect planning horizons
Why retirees should spend and enjoy more
The philosophy behind “A Richer Retirement”
Timestamps:
00:00 The origins of the 4% rule
03:00 The 1968 retirement “buzz saw” scenario
07:00 Common misconceptions about the 4% rule
10:00 Inflation and valuation adjustments
13:00 Diversification and higher withdrawal rates
15:00 Longevity, FIRE, and extended retirements
16:00 The U-shaped equity glide path
18:00 Rebalancing and allocation timing
19:00 The permanent portfolio and gold
20:00 Sequence of returns risk explained
22:00 Cash reserves and bucket strategies
23:00 Dynamic withdrawal approaches
24:00 Why the rule is now closer to 4.7%
27:00 The changing market environment
29:00 Key charts and frameworks from the book
31:00 The eight essential elements of planning
33:00 Withdrawal strategies and asset allocation
34:00 Required minimum distributions
36:00 Reflections on creating the 4% rule
38:00 Bill’s philosophy on life and retirement
40:00 Closing thoughts and where to find his book
