Bill Bengen, the financial planner whose 1994 research produced the original “4% rule,” has spent the past two years rewriting his own benchmark. His current view, reaffirmed in late-2025 and early-2026 commentary, is that the historical safe withdrawal rate is closer to 4.7% — and that most retirees today can reasonably plan for 5.25% to 5.5% without materially increasing the risk of outliving their portfolio.
The update is not a footnote. It is a structural revision to the most-cited number in retirement planning, and it has direct implications for portfolio sizing, claiming-age decisions, and the post-retirement spending plans of millions of households. Per CNBC’s reporting on Bengen’s revised guidance and his research summarized by Morningstar, Lange Report, and the Financial Planning Association, the new framework deserves a careful read.
Here is what changed, why it changed, and what advisors should do with it.
The Original 4% Rule and What It Was Designed to Solve
Bengen’s 1994 paper, “Determining Withdrawal Rates Using Historical Data,” asked a deceptively narrow question: across all 30-year retirement windows starting between 1926 and 1976, what was the highest fixed real withdrawal rate that a retiree could have taken from a 50/50 stock/bond portfolio without running out of money?
The answer, in his data, was just over 4%. He rounded down to 4% as a conservative planning assumption. That number became the planning industry’s default — but it was, from the start, designed as a worst-case floor, not a typical case.
The “worst case” Bengen identified was the retiree who began withdrawals in 1968, just before a brutal stretch of equity bear markets and 1970s inflation. The 4% rule is essentially the answer to: what would have worked even for that retiree?
For everyone who did not retire in 1968 — which is almost everyone — the actual safe rate was higher. Sometimes much higher.
What Bengen Now Says
The updated framework, as Bengen has articulated across multiple 2025 interviews and his Lange Report commentary, restates the math in three layers:
Layer 1: The Universal Safemax is 4.7%, not 4%
Bengen now refers to 4.7% as the “Universal Safemax” — the historical maximum safe withdrawal rate when the analysis is broadened beyond a single stock-bond mix to include small-cap allocations and a wider asset menu. That is the floor: even in the worst historical retirement window, 4.7% would have lasted 30 years.
Layer 2: Most retirees can take 5.25%–5.5%
For retirees who do not happen to begin withdrawals at the start of the next 1968-equivalent, Bengen has indicated that 5.25% to 5.5% is a defensible withdrawal rate. The reasoning is straightforward: the worst-case analysis embeds a cushion that most retirees do not actually need.
Layer 3: The historical average Safemax is around 7.1%
Across all 30-year retirement windows in his expanded data set, the average safe withdrawal rate is closer to 7.1%. Bengen is explicit that this is not a recommended planning rate — it includes retirements that began at peak market valuations followed by extended bull runs. But it provides the upper bound of what was historically possible.
The framing matters. The 4% rule was always a floor. Bengen’s updated language makes that explicit, and gives advisors permission to plan toward the middle of the distribution rather than the worst case.
Why This Update Lands in 2026
Three forces make Bengen’s updated framework especially relevant now.
Inflation has changed the conversation
Bengen has been emphatic, per his CNBC interview, that inflation is the “greatest enemy of retirees.” The 2021–2024 inflation surge cost real-dollar purchasing power for any retiree on a fixed nominal withdrawal — exactly the failure mode the 4% rule was designed to prevent.
The 2026 reset, with the Social Security COLA cooling toward an estimated 1.7% for 2027 (per CNBC’s coverage), reframes inflation risk as the binding constraint on withdrawal rates, not market sequence risk alone. As we covered in our Social Security 2026 analysis, the disinflation backdrop changes the COLA arithmetic in ways that planners should incorporate.
Withdrawal strategies are no longer “set-and-forget”
Bengen has explicitly moved away from his earlier framing that retirees should pick a rate and hold it. His current guidance, summarized across 2025 commentary, is that retirees should review their withdrawal rate at least annually and adjust based on portfolio performance, inflation realized, and remaining life expectancy.
That is a meaningful philosophical shift for the practitioner community. It moves the planning conversation from “calculate the right rate at retirement” to “calibrate the rate as a continuous process.”
Tax law gives 65+ retirees more room
The new $6,000 senior bonus deduction introduced by the One Big Beautiful Bill Act (covered in our 2026 tax bracket analysis) reduces the after-tax cost of pre-tax withdrawals for retirees age 65 and older. A retiree taking a higher gross withdrawal but capturing the new deduction may have a lower effective spending rate than the pre-2026 regime would have implied.
The combination of higher gross safe rate (per Bengen) and lower effective tax burden (per the new deduction) opens a meaningful planning window.
What Advisors Should Change
Three practical updates to the post-retirement planning playbook:
1. Recalibrate the default planning input
If the standard Monte Carlo or deterministic projection in the firm’s planning software still anchors at 4.0% as the recommended starting withdrawal rate, that input is now meaningfully conservative. Per Morningstar’s retirement income research, even Morningstar’s own recommended starting rate has drifted upward in recent annual updates.
Advisors should check what their planning system defaults to and whether that default is consistent with Bengen’s revised framework — or override it explicitly per client.
2. Build the annual review protocol into the engagement
If the planning conversation is now “calibrate rather than set,” the firm needs a documented annual withdrawal review process. The protocol should cover:
- Year-over-year portfolio value vs. target glide path
- Realized inflation against the planning assumption
- Life expectancy update (longevity has a meaningful impact on the safe rate)
- Spending pattern actual vs. projected
- A documented decision: hold, increase, or decrease the rate
This is an opportunity for client engagement and for documenting fiduciary process. It is also an opportunity to deepen the relationship at exactly the moment retirees most appreciate having a planner.
3. Incorporate the new tax framework into withdrawal sequencing
The senior bonus deduction shifts the optimal sequence between pre-tax accounts (traditional IRAs, 401(k)s) and Roth/taxable balances for many retirees age 65+. A withdrawal sequencing plan calibrated in 2024 or earlier likely under-pulls from pre-tax accounts. The firm’s standard sequencing logic should be re-run for 2026 and forward.
The Practitioner Caveat
Bengen’s updated rates are statistical observations, not personal prescriptions. Three caveats matter:
- Asset allocation drives a meaningful portion of the rate. The 4.7% Universal Safemax assumes broad diversification including small-cap exposure. Portfolios concentrated in narrower mixes can have meaningfully different safe rates.
- Sequence risk in early retirement is the dominant variable. A retirement that begins in 2026 and faces a 30% bear market in year two has different safe rate dynamics than one that begins after a long bull market.
- Behavioral compliance matters more than the rate itself. A retiree who panics and cuts spending in year three of a bear market materially improves portfolio survival regardless of the starting rate. The planning conversation should include the behavioral commitment, not just the math.
The point of Bengen’s update is not that 4% is wrong. It is that 4% was always a floor. Most retirees did not need that much cushion, and most retirees today are leaving meaningful spending capacity on the table by anchoring on the conservative number rather than on a calibrated personal rate.
What Advisors Are Watching
Two questions to bring to the next planning meeting:
- Does the firm’s standard retirement-income engagement reflect Bengen’s updated framework, or does it still implicitly anchor on the 1994 paper?
- If the answer is the latter, what would change in the firm’s recommended withdrawal rates, sequencing logic, and annual review cadence — and which clients would benefit most from a refresh conversation in 2026?
The 4% rule was a remarkable contribution to the planning profession. The 4.7% framework, with its explicit annual recalibration, may be the more practically useful one for the decade ahead.
Sources: CNBC on Bengen’s inflation warning; Morrissey Wealth Management on the 4.7% rate; Lange Report August 2025 on Bengen’s update; Morningstar retirement income research; FPA Journal on revisiting Safemax; Prudential on the 4% rule in 2026.
