Creator of 4% Rule Amends Withdrawal Rate to 4.7%
In the mid-1990s, financial adviser William P. Bengen created the 4% rule – the idea that retirees should plan to spend 4% of their savings each year in order to make them last throughout retirement. It mattered because no one wants to outlive their retirement savings.
Over the past 30 years, the 4% rule has been treated as the golden rule of retirement savings, with many seniors doing their best to adhere to it. Now, Bengen has amended the rule, and he thinks retirees should pay attention and start spending more.
When Bengen came up with that financial model, he made certain assumptions, namely that a retirement portfolio would be split 50-50 between stocks and bonds. He further based his work off market data over a 50-year span from 1926 to 1976.
Now, he believes retirees should withdraw up to 4.7% of their portfolio each year. The change is the result of Bengen continuing to tinker with his calculations and refining his original assumptions.
They now include a far broader portfolio, including stocks for companies of varying size, international stocks, bonds and Treasury bills. Furthermore, the calculations are now predicated upon a mixture of 55% stocks, 40% bonds and 5% cash.
In an interview with USA Today, he explained that “the primary reason for the change is that my research has gotten more sophisticated.” He also told Business Insider that as a result of higher-than-average stock market returns, retirees have greater leeway than they may have had in the past to withdraw greater sums.
Bengen counseled against being overly conservative in adhering to his rule due to a phenomenon he labeled “FOROM” – Fear Of Running Out of Money, telling Business Insider “It dominates their philosophy in retirement, and therefore, they'll just simply spend a lot less than they could, which to me is a real shame because they spent all these years saving and sacrificing, and I think they should be able to get the maximum possible out of it."
His statement is backed up by recent data from the Employee Benefit Research Institute. In a June 2026 study, they found that roughly one-third of retirees in their mid-80s still had the same, or even a greater amount of money in their accounts as when they retired.
This is not the first time Bengen has amended the rule. He previously amended it to 4.5% when he, himself retired in 2013.
While the 4% rule has long been considered the golden rule of retirement spending, some have criticized attempts to rigidly adhere to it, rather than adjusting as needed. In a 2025 interview, Caleb Silver, editor-in-chief of Investopedia, remarked that “the 4% was a general rule of thumb, but the reality is, people really have to look at the true price of what it costs to be them in retirement.”
Rob Williams, managing director of financial planning at financial giant Charles Schwab, credited the rule’s longevity to the fact that it has made a complicated issue feel more manageable, and acknowledged the rule is a good place to start. However, he believes that retirement planning should be a “living document,” updated annually based off investment returns, inflation, and other factors.
One of the key issues with the original 4% rule is that life expectancy has increased.
When the rule was first crafted in the 1990s, Bengen assumed that savings would have to last 30 years, when the average American life expectancy was 75.7 years. Now, the average U.S. life expectancy is almost 80.
Another factor that could complicate rigid adherence to the 4% rule, is inflation. At the time it was calculated, inflation averaged between 2 and 3%. While the inflation rate as of July 2026 was 3.4%, just over four years ago, the country’s inflation rate hit a 40-year high of 9.1%. This can spur greater withdrawals that require significant adjustments to any retirement plan.
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