The 4% Rule in 2026: What the Research Actually Says Now

Where the number actually came from

The 4% rule did not come from a marketing team or a rule of thumb passed down at a dinner party. It came from a financial planner named William Bengen, who published a paper in the Journal of Financial Planning in October 1994 titled "Determining Withdrawal Rates Using Historical Data."

Bengen was trying to answer a question his clients kept asking: how much can I actually spend each year in retirement without running out of money? He built a model using a 50/50 portfolio of stocks and bonds, then tested it against every 30-year retirement period in the historical US market record. He adjusted the withdrawal amount for inflation each year, the way a real retiree's spending would need to rise with the cost of living. The result: a starting withdrawal rate of 4.15%, adjusted annually for inflation, had never emptied the portfolio in 30 years. That got rounded down to the tidier "4% rule" in the years that followed.

Four years later, three finance professors at Trinity University in San Antonio, Philip Cooley, Carl Hubbard, and Daniel Walz, ran a related but distinct analysis, published in 1998 in the Journal of the American Association of Individual Investors. Instead of asking for the single worst-case rate that never failed, they tested a range of withdrawal rates against every rolling 30-year period from 1926 to 1995 and reported the percentage of those periods that succeeded. For a 50/50 stock-bond portfolio, a 4% initial withdrawal rate, adjusted for inflation, succeeded in 95% of 30-year periods. A 3% rate succeeded 100% of the time. A 5% rate dropped to 76%, and 6% fell to 51%. This became known as the Trinity Study, and its success-rate framing, rather than Bengen's original worst-case framing, is what most people mean today when they cite "the 4% rule."

Both studies share the same bones: a 30-year retirement, a stock-heavy portfolio, inflation-adjusted spending, and US historical market data as the test bed. That's worth holding onto, because every caveat about the 4% rule in 2026 traces back to one of those four assumptions.

What changed since 1998

Nothing about the math changed. What changed is that both studies are backward-looking, and 2026's starting conditions are not 1994's or 1998's. Valuations, bond yields, and life expectancy have all moved since the original research periods, and every year that passes gives researchers a longer, updated dataset to retest the same question against.

Morningstar publishes an updated version of this analysis annually as part of its "State of Retirement Income" research. For a retiree starting in 2026, Morningstar's base-case safe starting withdrawal rate is 3.9%, for a 30-year retirement with a portfolio holding 30% to 50% in equities, targeting a 90% probability the money lasts the full 30 years. That's up slightly from the 3.7% Morningstar calculated for 2025, a result of improved capital market assumptions going into the current year's model, not evidence that safe spending is on a steady downward slide. Notably, Morningstar's own number sits below the "official" 4%, which is part of why the debate keeps resurfacing.

Bengen himself has also revisited his original work. In more recent research covered in late 2025, he moved his own recommended figure up rather than down, to 4.7%, after expanding his model beyond the original two-fund US large-cap-and-bond portfolio to include a more diversified mix of stock asset classes, spanning mid-cap, small-cap, and micro-cap US stocks alongside international exposure. A retiree holding a more diversified portfolio than his 1994 test case has historically been able to sustain a higher withdrawal rate, because diversification reduces the odds of a single bad stretch in one asset class wrecking the whole plan.

The honest 2026 picture is that the number was always a function of the portfolio and the assumptions behind it. Different researchers, using different portfolio mixes and different market outlooks, land in different places: high 3s if you're being conservative about the next 30 years, right around 4% on the original historical test, and closer to 4.7% if you're willing to diversify further than Bengen's original model did.

What a percentage point actually costs you

The debate over 3.9% versus 4% versus 4.7% can feel abstract until you put dollar figures next to it. Here's what each rate produces as a starting annual income, before taxes, across three portfolio sizes.

The gap between the most cautious figure and the most optimistic one is real money: on a $1.5 million portfolio, it's the difference between $58,500 and $70,500 a year, a $12,000 swing in annual spending. But a move from 4% to 3.9% alone is a 2.5% haircut, which for most retirees means trimming one discretionary line item, not overhauling a plan.

Run the math the other direction and it shows how much a given income target actually costs. $60,000 a year in today's dollars needs a $1.5 million portfolio at 4%, but $1.54 million at 3.9%, roughly $40,000 more under the more conservative assumption. If you're still building toward that number, it's worth checking how much net worth you actually need to retire against your own target income and timeline, rather than a single withdrawal rate in isolation.

The caveats every version of this research shares

Retirement length matters more than the headline number. All of these studies were built around a 30-year retirement. Someone retiring at 65 and expecting to live into their mid-90s is roughly in that window. Someone retiring at 45 or 50 under a FIRE plan is not. A longer retirement gives market downturns more time to compound against a fixed withdrawal, which is why researchers who model early retirement specifically tend to land on lower starting rates than the 3.9% to 4.7% range above. If you're planning an early exit, the order in which returns arrive matters as much as the average return itself, which is worth understanding through sequence of returns risk before you lock in a number.

Asset allocation drives the result, not the withdrawal rate in isolation. Bengen's original 4.15% and his newer 4.7% used the same 30-year retirement and the same inflation-adjustment method. What changed was the number of asset classes in the portfolio. A retiree holding only cash, or only a single stock index, is working from a different set of odds than the diversified portfolios these studies assume, regardless of which withdrawal rate they pick.

A fixed rate isn't the only option, and it isn't what most retirees actually do. Every version of this research so far assumes a retiree who picks a rate in year one and then mechanically increases that dollar amount with inflation every year afterward, regardless of what the market does. Few real retirees behave that rigidly. Guardrails approaches, most notably the framework Jonathan Guyton and William Klinger published in 2006, let a retiree start higher, often in the 5% to 5.6% range, and then adjust spending up or down as the portfolio's actual performance comes in: a preset cut when withdrawals drift too high relative to the portfolio, a raise when they drift too low. Morningstar's own 2026 research reflects this too, putting the flexible, guardrails-adjusted starting rate as high as 5.7%, well above its 3.9% fixed-rate base case. The tradeoff is variability: a flexible retiree spends more on average but has to actually adjust spending in bad years, where a fixed-rate retiree gets certainty at the cost of a lower starting number and, historically, a larger unspent balance at the end.

None of this means you need to build a spreadsheet model of guardrail triggers before you can retire. It means the specific number, 3.9% or 4% or 4.7%, matters less than which of these levers, retirement length, portfolio diversification, and willingness to flex spending, you're actually planning around.

So what withdrawal rate should you actually use

There's no single correct answer, and anyone who gives you one without asking about your retirement length and portfolio mix is skipping a step. A reasonable starting approach: if you're retiring at a traditional age with a 30-year horizon and a diversified, stock-heavy portfolio, something in the high 3s to 4% range, in line with Morningstar's 2026 base case and the original Trinity Study finding, is a defensible starting point. If your retirement is likely to run longer than 30 years, lean toward the more conservative end of that range or plan to revisit it. If you're comfortable adjusting your spending when markets are down, a guardrails approach can support a meaningfully higher starting number.

What matters more than picking the "right" single rate is tracking your actual number over time and checking it against your real spending, not a rate you picked once and never revisited. Your savings rate and investment returns both feed into how fast you get to a given portfolio size in the first place, and the balance between the two matters more than most people assume in the years before retirement even starts. A monthly net worth snapshot, the kind Steady Wealth is built around, makes it easy to see whether your portfolio is tracking ahead of or behind whatever withdrawal assumption you're planning around, well before the year you actually need the number to be right.

Frequently asked questions

Is the 4% rule outdated in 2026?

The original 1994 and 1998 research still holds up as a historical backtest. What's changed is that researchers now publish updated versions of the same analysis every year using current market conditions, and those updates land in a range: Morningstar's 2026 base case is 3.9%, the original Trinity Study found 4% succeeded in 95% of historical periods, and Bengen's own updated, more diversified model suggests 4.7%. Treat 4% as one input among that current range, not a fixed target.

What withdrawal rate should I use in 2026?

For a traditional 30-year retirement with a diversified, stock-heavy portfolio, a rate in the high 3s to 4% is a reasonable, well-supported starting point based on Morningstar's 2026 research and the original Trinity Study. If your retirement will likely run longer than 30 years, or your portfolio is more conservative than the 50/50 to 60/40 mixes these studies test, lean lower. If you're willing to adjust spending in down years, a guardrails approach can support a higher starting rate.

Does the 4% rule account for Social Security or pensions?

No. The original Bengen and Trinity Study research modeled a portfolio funding 100% of a retiree's spending on its own. If you'll have Social Security, a pension, rental income, or any other guaranteed income stream, that income covers part of your spending outside the portfolio, which means the withdrawal rate only needs to apply to the gap between your total spending and your other income, not your full budget.

Why did Morningstar's number go up from 2025 to 2026?

Morningstar recalculates its safe withdrawal rate every year based on updated capital market assumptions, meaning its current outlook for stock and bond returns going forward. The move from 3.7% in 2025 to 3.9% in 2026 reflects a more favorable return outlook for the coming years, not a change in methodology or a reversal of an earlier warning.

Is the 4% rule safe for early retirement (FIRE)?

The original research was built around a 30-year retirement, which fits someone retiring around 65. Someone retiring at 40 or 45 is planning for a retirement that could run 50 years or longer, which gives market downturns more time to work against a fixed withdrawal schedule. Research that extends the same historical testing method out to 45- and 50-year horizons finds the safe starting rate drops toward 3.25% to 3.5%, and FIRE-focused planning generally uses a rate in that range rather than the traditional 4%.

What's the difference between the Trinity Study and Bengen's original research?

Bengen published first, in 1994, and asked a worst-case question: what withdrawal rate never failed across any historical 30-year period he tested, using a 50/50 stock-bond portfolio? He found 4.15%. The Trinity Study, published in 1998 by three Trinity University professors, asked a related but different question: at a range of withdrawal rates, what percentage of historical 30-year periods succeeded? They found a 4% rate succeeded 95% of the time with a 50/50 portfolio. The "4% rule" most people cite today blends both: Bengen's methodology and the Trinity Study's success-rate framing.