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How much should you withdraw from your retirement accounts each year?

Is 4% still the standard?

Updated:

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By:
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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.
Plant and coins inside a glass jar: Photo by Towfiqu barbhuiya on Unsplash

Photo by Towfiqu barbhuiya on Unsplash

Key Insights

  • Recent research suggests a more conservative starting withdrawal rate of 3.7%; though, some experts—including William Bengen—now recommend rates up to 4.7% if portfolios are well-diversified and inflation is accounted for.
  • There is no universal rule for all retirees; safe withdrawal rates vary with age, market conditions, retirement length, and other income sources, making personalized planning essential.
  • Flexibility is critical: experts advise routinely adjusting withdrawal rates based on market performance and personal circumstances, rather than following a fixed percentage each year.

Retirees today face a complex landscape with evolving financial advice on how much they can safely withdraw from their retirement accounts each year. The classic “4% rule”—withdraw 4% of your original portfolio annually, then adjust for inflation—has long served as a practical guideline. But is it still valid in 2025?

Here’s what retirement planners are now advising:

  • Recent Research: Major financial research firms like Morningstar and respected financial planners have recently updated their guidance. Morningstar now recommends a baseline starting withdrawal rate of 3.7% for new retirees, down slightly from 4% last year, reflecting changing market conditions and longevity concerns. This more conservative rate aims to protect retirees against market volatility and the increasing likelihood of longer retirements.
  • Bengen’s Update: William Bengen, the originator of the 4% rule, has raised his recommended safe withdrawal rate to 4.7% for 2025. He argues that updated analysis of market returns shows retirees could spend a bit more—provided their portfolio remains well-diversified and they plan to adjust for inflation annually.

“My research is more sophisticated, Bengen recently told Yahoo Finance. “I’ve increased the number of assets and created a more diversified portfolio.”

Bengen noted that his previous research only used portfolios with U.S. bonds and large U.S. stocks. Now he’s incorporated international stocks as well as stocks from small and mid-size companies.

What does this mean for retirees?

  • No One-Size-Fits-All: Experts caution that each retiree’s situation is unique. The safe withdrawal rate depends on your age, time horizon, market conditions, and whether you have other income sources like Social Security or a pension. Early retirees (before 60) may need to be more conservative, sometimes starting closer to a 3% rate, while those retiring in their 70s can often support 4.5%–5.5% or more.
  • Flexibility Is Key: Rather than rigidly adjusting your spending every year to match new research figures, most advisors recommend choosing a starting withdrawal percentage and then inflation-adjusting your withdrawals each year, provided your portfolio remains healthy. Sudden changes to withdrawal rates can create unwanted volatility in your income.

Additional strategies

  • Withdrawal Sequencing: Many advisors now focus on tax-efficient withdrawal strategies, such as withdrawing first from taxable accounts, then tax-deferred (like IRAs and 401(k)s), and finally Roth accounts. Strategic Roth conversions and thoughtful withdrawals can help reduce taxes and prolong the life of your portfolio.
  • Market Adaptation: Some retirees are advised to be flexible and reduce withdrawals during major market downturns, while slightly increasing during strong years, to further decrease the risk of running out of money.

Bottom Line

The 4% rule remains a useful starting point, but today’s retirees should be cautious. Most experts currently recommend initial withdrawal rates between 3.7% and 4.7%, depending on your age, retirement goals, and financial situation.

Partnering with a financial advisor can help tailor your withdrawal strategy and ensure your savings last as long as needed. A good place to start is on Retirement Living’s Retirement Planning page.