If you’ve spent decades saving and investing, retirement is your reward. It’s a time to enjoy what you’ve built without worrying whether your money will last. But deciding how much you can safely withdraw each year is one of the hardest parts of the transition from accumulation to income.
For years, the “4% rule” has been the standard advice. That means to withdraw 4% of your portfolio in the first year of retirement, adjust for inflation each year and your savings should last around 30 years. But as markets, inflation, and lifespans have changed, many investors are asking if that 4% rule still holds up?
Let’s explore what recent research says about safe withdrawal rates in 2026 and what high-net-worth retirees should keep in mind when balancing peace of mind with flexibility.
How The 4% Rule Came About
The 4% rule originated in the 1990s, when financial planner William Bengen analyzed historical market returns and found that retirees could have safely withdrawn about 4% annually from a balanced portfolio without running out of money over 30 years.
That rule worked well in a world where bonds paid 5% or more, life expectancies were shorter and inflation was relatively stable. Today’s conditions are different. Bond yields have been low for much of the past decade, equity valuations are higher, and people are living longer.
That doesn’t make the rule useless, it just means that 4% is a starting point, not a guarantee. As Morningstar noted in its 2025 report, the updated “safe” starting rate is closer to 3.7% for a moderate portfolio. The logic behind the rule still applies: you’re trying to strike a balance between enjoying your wealth and ensuring it lasts through an unpredictable future.
What The Research Says For 2025 and Beyond
If you retired in 1994, the 4% rule probably worked beautifully. If you’re retiring in 2026, the math is more complex.
Recent studies show that withdrawal rates need to adapt to lower expected returns and longer retirement horizons. Morningstar’s updated projections suggest that 3.5–3.7% is a more realistic starting point for a balanced 60/40 portfolio. Independent analyses, like the updated Trinity Study suggest similar or even more conservative numbers of around 3.0 – 3.5% for longer horizons or legacy-minded investors.
While work from Vanguard emphasises that investor-specific factors (asset allocation, bequest motive, retirement horizon) matter a lot, and that under conservative assumptions, safe withdrawal rates might be as low as 0.9 % in some scenarios.
Why The Rules Of Thumb Fall Short
The beauty of rules of thumb is that they’re easy to remember. The problem is that they don’t fit across the board.
Most retirees don’t have a perfectly smooth spending pattern or a single investment account to draw from. They have business proceeds, real estate income, taxable and tax-advantaged accounts, and charitable goals to balance. For high-net-worth families, those layers make a “one-number-fits-all” withdrawal rate even less useful.
Here are a few reasons reality tends to diverge from the rule:
Your time horizon is longer than 30 years
Many professionals retire earlier and live well into their 80s or 90s. If your horizon is 35–40 years, withdrawal rates and/or investment risk need to be adjusted accordingly.
Your lifestyle and legacy goals matter
If you want to preserve capital for children, fund a family foundation, or give generously, you’ll likely need a more conservative rate. Factoring these goals into your personal equation will provide a starting point for withdrawals that works for you.
Markets are unpredictable
The first few years of retirement have an outsized impact on your success in these mathematical scenarios. One of the key components is what we call the “flexibility premium”. If you are not saddled with high debt and fixed expenses, making withdrawals more flexible, you can start at a higher rate.
Your income sources are diversified
For many high-net-worth clients, withdrawals are only one piece of the puzzle. If you have pension income, rental properties, or trust distributions, that may reduce how much you need to draw from your portfolio, allowing you greater flexibility.
Real-life spending patterns don’t mimic mathematical constructs
Decades of experience have taught us that real-life spending patterns are not fully representative of what the models show us. Most retirees spend more early in retirement when they are healthy, desire travel, and may be assisting kids or grandkids with expenses. Sometimes, a higher starting withdrawal rate is acceptable, and knowing the client and their personal situation matters.
How To Find Your Personal Safe Withdrawal Rate
You can start by building your withdrawal strategy around your specific goals and time horizon.
Calculate your annual retirement expenditure
You should estimate how much income you’ll need for essential spending like housing, insurance, healthcare; as well as the amount you’d like for discretionary goals like travel, gifting, or philanthropy. This becomes the starting point that takes into account how you’d like to live in retirement.
Model multiple scenarios
Next, work with your financial advisor to run projections that include conservative market assumptions, higher inflation, and longer lifespans. This will help you to understand how your portfolio will perform under different scenarios.
Integrate tax and estate planning
Withdrawals don’t exist in isolation. It’s best to work with your financial advisor to understand the order in which you should draw from taxable, tax-deferred, and Roth accounts to maximize how long your portfolio lasts.
Strategic Roth conversions, charitable giving and timing distributions from trusts can all make a meaningful difference.
Build in liquidity and safety nets
Even the wealthiest retirees benefit from having cash reserves. Maintaining a few years of living expenses in cash or short-term bonds lets you ride out market downturns without selling investments at a loss.
Review and adjust regularly
A withdrawal plan should never be “set and forget.” Revisiting your plan annually or after major life or market events ensures it continues to align with your goals.
Time To Revisit Your Retirement Plan?
If your retirement plan still assumes the old 4% rule, now is a good time to take another look. The markets have changed, life expectancies have lengthened, and your goals may have evolved, too.
At Keen Capital, we help clients design retirement income plans that balance growth, security, and legacy, so you can enjoy the years ahead with confidence.
As fee-only fiduciaries, we don’t sell products or chase short-term performance. We help clients build retirement income strategies that integrate investments, taxes, estate planning, and family goals into one cohesive plan.
Schedule an introductory call with us today!
