Is the 4% Rule Dead? The 2026 Research Says 3.9%–4.7% — Here's Why the Range

Every year or two, a headline declares the 4% rule dead; every year or two, another declares it too cautious. Both camps can point to real research, because the current published numbers genuinely disagree — 3.9 percent from one respected source, 4.7 percent from another. The useful question is not which number is right. It is why credible researchers looking at the same markets publish different answers, and what that gap says about how the number should be read.

Where the 4% Came From

William Bengen introduced the rule in 1994, built on historical U.S. market data reaching back to 1926. The prescription is specific and often misquoted: withdraw 4 percent of the portfolio's initial value in the first year of retirement, then adjust that dollar amount for inflation each year — not 4 percent of whatever the balance happens to be. His finding was that a retiree following this plan with a diversified portfolio would have survived every 30-year historical period on record, including retirements begun at the worst possible moments.

Two Answers, Because Two Questions

The 2026 range comes from two research programs asking different things:

	Morningstar (Dec 2025)	Bengen, Updated (Aug 2025)
Headline rate	3.9%	4.7%
The question asked	What starting rate gives a 90% probability of lasting 30 years, using forward-looking return projections?	What starting rate survived the single worst historical 30-year period on record?
Basis	Projected future returns	Historical U.S. data back to 1926
Portfolio assumed	30%–50% equities	Diversified, including small-cap equities and additional asset classes
Direction of revision	Up from 3.7% a year earlier	Up from the original 4.0% ("Safemax")

(Morningstar, December 2025; Advisor Perspectives, August 2025)

Two details complete the picture. Bengen's 4.7 percent is his worst-case figure — across all historical starting years, the average sustainable rate ("Safemax") was approximately 7.1 percent, which is why retirees in most historical periods could have spent considerably more. And Morningstar's 3.9 percent is deliberately conservative by construction: a 90 percent success target means accepting that one modeled path in ten still fails.

The Arithmetic on $1 Million

The decimals sound small until they become dollars. On a $1,000,000 portfolio:

• 3.9% start: $39,000 in year one, inflation-adjusted thereafter
• 4.7% start: $47,000 in year one, inflation-adjusted thereafter

The spread is $8,000 of first-year income per million — the price of the difference between "survives a 90 percent probability test on projected returns" and "survives the worst market history has produced." Neither figure is a fact about the future; each is a modeling posture toward it.

Sequence Risk: Why the Range Isn't the Whole Story

The starting percentage shares billing with a second variable: the order in which returns arrive. Two retirees can earn identical average returns over 30 years and end in completely different places, because withdrawals during early losses sell shares at depressed prices — shares that are gone permanently and cannot participate in the recovery.

The asymmetry has been quantified: in Morningstar research, a portfolio that dropped at least 15 percent in the first year of retirement, while the retiree withdrew 3.3 percent of the balance, faced sixfold higher odds of depletion within 30 years than one with a positive first-year return. (CNBC, March 2025) The historical worst cases that produced the original 4 percent figure — the 1966 and 1973 retirement cohorts — were precisely retirements that began into poor early returns. The withdrawal-rate debate and the sequence problem are the same problem viewed from two ends.

What Moves the Number

The research is more united on the levers than on the starting decimal:

• Spending flexibility. Guardrail-style plans — trim spending modestly after weak markets, raise it modestly after strong ones — support starting rates roughly 0.5 to 1.5 percentage points higher than a rigid inflation-adjusted plan, without materially raising depletion risk.
• Social Security timing. Morningstar's work finds that delayed claiming combined with flexible spending can support starting withdrawal rates near 5.7 percent.
• Horizon. Every figure above assumes 30 years. A retirement beginning in the 50s may need a 35–40-year plan, which pushes sustainable rates down; a shorter horizon pushes them up.
• Portfolio composition. Bengen's upward revision to 4.7 percent came specifically from adding asset classes, small-cap equities among them; cash-heavy allocations underperform the assumptions behind all of these figures.

So — Dead?

By the published numbers, no. Four percent sits comfortably inside the 3.9–4.7 range the two major research programs currently support, and above Morningstar's floor by only a tenth of a point. What the last few years of research have actually retired is something narrower: the idea that one decimal, fixed at retirement and never revisited, is the whole of an income plan. The range exists because "safe" is a modeling choice — and the levers above move outcomes more than the choice of starting decimal does.

What This Does Not Mean

None of these figures is a guarantee — a 90 percent success probability means one modeled path in ten fails, and historical worst cases bound the past, not the future. The numbers describe model outputs under specific assumptions (30-year horizon, particular allocations, disciplined inflation-adjusted spending), and real households differ from models in health, spending patterns, and taxes. Nothing here is a withdrawal rate for any particular household: the published range is where the research conversation stands, not a prescription, and the rate that fits an actual retirement depends on that household's full picture — guaranteed income sources, horizon, flexibility, and the market conditions at the moment withdrawals begin.

Go Deeper

• The Learn library — every guide on the site, income planning included, in one place.
• Retirement Income and Withdrawal Rates: What the Research Actually Says — the full long-form guide, including the bucket approach and bond ladders.
• Retirement Projection tool — savings trajectory against your own contribution and return figures.

Frequently Asked Questions

Q: Is the 4% rule dead in 2026?

No. It sits inside the range current research supports: Morningstar's 3.9 percent (forward-looking, 90 percent confidence) to Bengen's 4.7 percent (historical worst case, additional asset classes).

Q: Why do the two research houses disagree?

Method, not arithmetic. One projects future returns and targets a success probability; the other asks what survived the worst period in market history. Different questions, different answers.

Q: What does the rule actually prescribe?

Withdraw the starting percentage of the portfolio's initial value in year one, then adjust that dollar amount for inflation annually — not the percentage of each year's current balance. On $1 million, 3.9 percent is $39,000 in year one; 4.7 percent is $47,000.

Q: What moves the sustainable rate most?

Flexibility and sequence. Guardrail-style spending adds roughly 0.5–1.5 percentage points in the research; delayed Social Security with flexible spending supports rates near 5.7 percent in Morningstar's work. In the other direction, a first-year loss of 15 percent or more, with withdrawals ongoing, raised modeled depletion odds sixfold.

The views and opinions expressed here are those of The Financial Sciences Company as of the publish date and are provided for informational and educational purposes only. They are not personalized investment, tax, or legal advice. The Financial Sciences Company, LLC is an investment adviser registered with the State of Texas. Registration does not imply a certain level of skill or training. Additional information is available in our Form ADV at adviserinfo.sec.gov.

General educational information, current as of 2026. Not personalized investment, tax, or legal advice — figures and rules change. For guidance specific to your situation, talk to a qualified professional.