Bill Bengen Updates Retirement Rule to Higher Withdrawal Rates

Financial researcher Bill Bengen, who established the 4% rule for retirement savings in 1994, now advocates for higher withdrawal rates based on current market conditions. Bengen updated his recommendation to 4.7% following above-average stock returns, though he suggests a 5.5% rate is more realistic for most investors.

Bengen describes the original 4% guideline as a benchmark for ultra-conservative individuals preparing for the worst historical market conditions. He argues that a fear of running out of money leads many retirees to underspend, which often results in leaving behind significant savings despite years of sacrifice.

This shift is supported by data from statistician Stefan Sharkansky, who suggests the 4% rule could lead to a portfolio growing by 50% over 30 years. Additionally, a June study by the Employee Benefit Research Institute found that one-third of retirees in their mid-80s retain most or more of their original retirement sum.