Skills / Personal-finance

4% Rule

Portfolios with a minimum 50 percent allocation to stocks could sustain a [initial] withdrawal rate of 4.15 percent for at least 33 years.

William Bengen's 4% Rule is the foundational safe withdrawal rate framework for retirement planning, derived from testing every historical 30-year retirement window since 1926. It gives retirees a specific, calculable starting withdrawal amount — 4% of total portfolio value — then adjusts each subsequent year for inflation. It is not a rough estimate; it is the historically validated SAFEMAX rate, the highest withdrawal rate that survived every market sequence including the Great Depression and 1970s stagflation.

By William Bengen  ·  Free

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Specimen 01 · Live diagnosis4% Rule

Input

“I have $850,000 saved. I'm 62 and plan to retire next year at 63. I'd expect a 30-year horizon, maybe longer.”

Diagnosis

Welcome.

Full transcript ↓

Calibrated referenceagent-skills.ai

The gap

Withdraw 4% in year one, adjust for inflation every year after — never outlive your money

Bengen's framework operates in three steps: (1) Calculate Year 1 withdrawal as 4% of total retirement portfolio at the moment of retirement. (2) Each subsequent year, adjust the prior year's dollar withdrawal by the Consumer Price Index (CPI) inflation rate — not by portfolio performance. (3) Maintain a portfolio allocation of 50–75% equities and 25–50% bonds throughout. The rule was validated by stress-testing every historical 30-year retirement window from 1926 onward and finding that 4.15% (rounded to 4%) was the SAFEMAX — the highest rate that would not have depleted any portfolio before 30 years. Bengen later showed that adding a small-cap equity allocation raises SAFEMAX to approximately 4.5%. For non-30-year time horizons (such as FIRE retirees with 40–50 year retirements), the methodology prescribes lower rates, typically 3.3–3.5%.

The problem

Most retirees face one of two failure modes: withdrawing too much too early and depleting the portfolio before death, or withdrawing too little and living unnecessarily frugally. The sequence-of-returns risk — where a market crash in early retirement years causes irreversible damage — makes intuitive withdrawal strategies dangerous. Bengen's research showed that guessing or using average returns leads to ruin in the worst historical sequences.

The solution

Apply Bengen's SAFEMAX methodology to your portfolio and get a specific, historically validated withdrawal dollar amount that — with the prescribed asset allocation — has survived every market sequence since 1926, including the Great Depression and 1970s stagflation.

You bring

Total retirement portfolio value at retirement date
Planned retirement duration (standard 30 years, or custom for FIRE)
Current or anticipated inflation rate
Existing income sources (Social Security, pension, annuity)

You get

Specific Year 1 safe withdrawal dollar amount
Year-by-year inflation-adjusted withdrawal schedule
Portfolio longevity comparison across 4%, 3.3%, and 4.5% withdrawal scenarios
Adjusted safe withdrawal rate if your time horizon differs from 30 years

In action

Watch the methodology work.

Three specimens from a single real session: the same situation, before and after, the full transcript, and the skill answering live in the channel where the work happens.

Fig.01  —  The same situation, two ways

Specimens A · B

Specimen ABefore

Without the skill

You have $900,000 saved and plan to retire in 18 months. You've heard '4%' mentioned but aren't sure if that means 4% of your current balance, 4% of what you'll have at retirement, or 4% per month. You're spending $5,200/month now and wondering if your portfolio can handle that indefinitely — or whether you need to cut spending or delay retirement by 2–3 years.

×The situation as it arrives — before the methodology is applied.

Specimen BAfter

With 4% Rule

You know your SAFEMAX Year 1 withdrawal is $36,000 annually ($3,000/month). With your $22,000 Social Security income starting at age 66, your portfolio draw drops to $14,000/year — a 1.56% rate that falls well within safe territory even over a 40-year horizon. You have a year-by-year inflation-adjusted schedule and a clear comparison showing the difference between 30-year and 40-year withdrawal rates, so you can make the retirement timing decision with numbers rather than anxiety.

◦The same situation once the methodology holds.

Fig.02  —  A real session, unedited

In-app · assistant

4% RuleClaude

4% Rule

Welcome. I apply William Bengen's SAFEMAX methodology to your retirement portfolio. The framework is specific: we start with 4% of your total portfolio value in Year 1, then adjust each year for inflation — not for market returns. To run your SAFEMAX calculation, I need two numbers: your total retirement portfolio value today, and the age at which you plan to retire (or your expected retirement duration). What are those figures?

I have $850,000 saved. I'm 62 and plan to retire next year at 63. I'd expect a 30-year horizon, maybe longer.

Good. With a $850,000 portfolio and a 30-year baseline horizon, your SAFEMAX Year 1 withdrawal is $34,000 (4% × $850,000). That's $2,833 per month before Social Security or other income. Each subsequent year, that dollar amount adjusts by CPI — so if inflation runs at 3%, Year 2 becomes $35,020. If you're planning for longer than 30 years — say 35–40 years — Bengen's methodology calls for dropping the rate to approximately 3.5–3.7%, giving a Year 1 withdrawal of $29,750–$31,450. Do you have Social Security or pension income that would reduce the draw needed from this portfolio?

Yes — I'll get about $18,000 per year from Social Security starting at 65.

That changes the picture meaningfully. Once Social Security begins at 65, your required portfolio draw drops to $16,000/year ($34,000 SAFEMAX − $18,000 SS). That's only 1.9% of your $850,000 portfolio — well below the SAFEMAX threshold and historically very safe even over a 40-year horizon. In your first two years (ages 63–64, before SS begins), you'd draw the full $34,000 from the portfolio. After that, the reduced draw significantly extends portfolio longevity. Would you like me to build out the full 30-year inflation-adjusted cash flow table with the Social Security offset applied from Year 3 onward?

Yes, that would be really useful. Also — I've heard about the 4.5% version. Would that be better for me?

The 4.5% Rule applies if you include a small-cap equity allocation in your portfolio alongside your standard large-cap equities and bonds. Bengen's later research showed this allocation change raised SAFEMAX by about 0.5 percentage points. At 4.5%, your Year 1 withdrawal would be $38,250 instead of $34,000 — about $350/month more. The tradeoff is accepting higher volatility from small-cap exposure. For your situation — where Social Security covers more than half your need after age 65 — the extra $350/month from the 4.5% Rule is meaningful but not essential to sustainability. I'll include both scenarios in your cash flow table so you can see the actual difference year by year.

That makes it much clearer. I hadn't thought about how Social Security changes the whole equation.

Reply to 4% Rule…

What the skill is doing

01SAFEMAX Calculation

02Inflation-Adjusted Withdrawal Schedule

03Time Horizon Adjustment

Fig.03  —  The same skill, in the channel you already use

WhatsApp · live

9:41

4R4% Ruletyping…

Messages are end-to-end encrypted. No one outside of this chat can read them.

Today

I have $850,000 saved. I'm 62 and plan to retire next year at 63. I'd expect a 30-year horizon, maybe longer.9:14✓✓

I apply William Bengen's SAFEMAX methodology to your retirement portfolio.9:14

The framework is specific: we start with 4% of your total portfolio value in Year 1, then adjust each year for inflation — not for…9:15

To run your SAFEMAX calculation, I need two numbers: your total retirement portfolio value today, and the age at which you plan to…9:15

Message

The same skill, where the work happens.

No new app to learn. The methodology runs over the WhatsApp Business API, so the answer lands as a reply in the thread you’re already in — same rigour, zero context-switch.

◦Reads the situation, names the pattern, returns one concrete next move.

◦Delivered in seconds, inside a conversation that already exists.

Specimen · WhatsApp Business API · live

Capabilities

What it does, specifically.

Each capability is a distinct move drawn straight from the source methodology — not a generic assistant guessing.

CapabilityC-01

SAFEMAX Calculation

Computes your Year 1 safe withdrawal amount using Bengen's SAFEMAX formula: 4% of total portfolio value at retirement. Produces a specific dollar figure, not a range or estimate.

◦ MethodBased on Bengen's 1994 historical analysis that identified 4.15% (rounded to 4%) as the maximum rate surviving all 30-year sequences from 1926 onward.

CapabilityC-02

Inflation-Adjusted Withdrawal Schedule

Generates a year-by-year withdrawal schedule that increases each year's dollar amount by the CPI inflation rate — regardless of portfolio performance in that year.

◦ MethodBengen's methodology explicitly adjusts for inflation annually, not portfolio returns, to preserve real purchasing power across the retirement horizon.

CapabilityC-03

Time Horizon Adjustment

Modifies the safe withdrawal rate for retirement periods other than 30 years. FIRE retirees with 40–50 year horizons receive adjusted rates (typically 3.3–3.5%) to maintain the same historical survival guarantee.

◦ MethodBengen's framework is parametric on time horizon; the 4% rate applies specifically to 30-year retirements and requires downward adjustment for longer periods.

CapabilityC-04

Small-Cap Enhancement Modeling

Calculates an elevated safe withdrawal rate (up to ~4.5%) if the portfolio includes a small-cap equity allocation, reflecting Bengen's later research refinement.

◦ MethodBengen's post-1994 research showed that adding small-cap stocks to the standard equity allocation raised SAFEMAX to approximately 4.5% — his so-called '4.5% Rule' extension.

CapabilityC-05

Social Security & Pension Offset Analysis

Reduces the required portfolio withdrawal draw by incorporating fixed income sources (Social Security, pension, annuity), allowing a smaller portfolio to sustain the same retirement lifestyle.

◦ MethodBengen's framework is modular: guaranteed income sources reduce the required SAFEMAX draw from the portfolio, effectively extending longevity beyond the baseline 30-year scenario.

Tested

Graded before it shipped.

Every skill is scored against independent scenarios for methodology fidelity before it goes live — not vibes, a rubric.

What it produces

OutputD-01

SAFEMAX Withdrawal Statement

A single-page summary showing your Year 1 withdrawal amount, the calculation basis (portfolio size × 4%), and the historical survival record it is grounded in.

OutputD-02

30-Year Inflation-Adjusted Cash Flow Table

Year-by-year table of withdrawal amounts adjusted for CPI, showing real purchasing power maintained across the full retirement horizon.

OutputD-03

Withdrawal Rate Scenario Comparison

Side-by-side comparison of 3.3%, 4%, and 4.5% withdrawal rates applied to your portfolio — showing annual withdrawal amounts, portfolio projections, and tradeoffs for different risk tolerances and time horizons.

The source

Grounded in the original work.

Every answer traces back to a real source and the practitioner who wrote it — not a secondhand summary. Here is the source of record.

Source authorA-01

William Bengen

William Bengen is a CFP and financial planner who published his landmark 1994 study in the Journal of Financial Planning, which introduced the concept of the SAFEMAX withdrawal rate using U.S. market data going back to 1926. He ran a private financial planning practice in Southern California. His 1994 paper is one of the most cited works in retirement planning research, and he later extended the framework to include small-cap equity allocations, raising the suggested SAFEMAX to approximately 4.5%.

Status · Inspired by William Bengen’s work — not yet claimed. Are you William Bengen?

Primary sourceS-01

Determining Withdrawal Rates Using Historical Data (Journal of Financial Planning, 1994)

by William Bengen

CFP, researcher, Journal of Financial Planning (1994); originator of SAFEMAX concept; framework adopted globally by financial planners and embedded in Vanguard, Fidelity, and major retirement tools.

Read the original ↗

Citationfinancialplanningassociation.org

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At launchI have $720,000 in retirement savings and I'm planning to retire in 2 years at age 61. My time horizon could be 35+ years. Can you run my SAFEMAX calculation and tell me whether the standard 4% rule still applies, or if I need to use a lower rate for my longer horizon?