Ready For Retirement You Could Spend WAY More Than the 4% Rule Suggests (Says the Man Who Created It)
Sep 20, 2025
In this insightful discussion, Bill Bengen, an MIT-trained aeronautical engineer turned financial advisor and author of A Richer Retirement, revisits his famous 4% rule. He reveals that retirees might safely withdraw up to 8% under specific conditions, thanks to diversification and market timing. Bengen emphasizes the importance of adapting withdrawal strategies based on inflation and stock valuations, debunking myths about the rigidity of a single "magic number". His process-oriented approach encourages customization for individual retirement circumstances.
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Worst-Case Basis Of The 4% Rule
- The original 4% rule was chosen to protect the retiree with the worst historical outcome.
- Bill tested retirement starting October 1968 which faced back-to-back bear markets and high inflation in the 1970s.
The 'Mesa' Effect In Asset Mix
- Withdrawal success doesn't improve linearly with more stocks; it peaks across a mid-range allocation.
- Bill found a 'mesa' where 45–75% stocks produced similar safe withdrawal rates.
Diversify To Raise Your Floor
- Diversify beyond just large-cap stocks and intermediate bonds to raise your worst-case safe withdrawal rate.
- Bill's expanded seven-asset analysis increases the historical worst-case safe rate from 4.0% to about 4.7%.
