He Invented the 4% Rule | Bill Bengen on Why He Now Thinks 5% Works

Nov 12, 2025

Bill Bengen, a retirement researcher known for creating the original 4% withdrawal rule, shares his insights on retirement planning. He discusses how his perspective has shifted, suggesting retirees may safely withdraw closer to 4.7%. Bengen explores the significance of diversification, the U-shaped equity glide path, and the implications of inflation on withdrawal rates. He also highlights the importance of enjoying retirement and shares strategies for mitigating sequence-of-returns risk. His personal journey and evolved thinking make this conversation both informative and inspiring.

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ANECDOTE

How The 4% Rule Began

Bill Bengen started researching withdrawal rates because textbooks offered no guidance for his clients.
He built spreadsheets and searched history to find the worst-case retirement scenarios himself.

INSIGHT

1968 Was The Retirement 'Buzzsaw'

The worst historical retirement start was October 1968 because bear markets plus high inflation destroyed portfolios.
Deflationary collapses like 1929–32 were less damaging because withdrawals could rise in real terms.

ADVICE

Apply 4% As A COLA-Adjusted Start

Use the 4% rule as an initial guideline but apply it as a COLA-adjusted first-year withdrawal, not a fixed annual percent.
Treat the 4% rule as one of the last planning steps after mapping expenses, taxes, and allocation.

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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