In the last column, I reviewed three new finance books, including one I had eagerly anticipated: William Bengen’s A Richer Retirement. Bengen, the certified financial planner who popularized the so-called 4% Rule, has written a follow-up that revisits his original guidance with updated data and broader portfolio ideas.
I had planned to focus exclusively on that book but instead ran a related survey on my site, asking more than a dozen financial advisors on both sides of the border for their views on the 4% Rule and the tweaks Bengen recommends. The raw responses are available on my blog, but since that post runs well over 5,000 words, this column highlights the most useful comments and adds a few of my own observations.
“The 4% Rule, created by CFP Bill Bengen in the 1990s, remains one of the most referenced retirement withdrawal guidelines. It suggests withdrawing 4% of your portfolio in the first year of retirement and adjusting that amount for inflation each year. The idea was to provide a sustainable income stream for at least 30 years without depleting your savings.”
Andrew Izrailo, a trusts and estates expert and Senior Corporate and Fiduciary Manager at Astra Trust, summarizes Bengen’s updated stance: Bengen revisits the withdrawal concept with newer market data and a wider set of assets. He now suggests the safe withdrawal rate could rise toward roughly 4.7% in some scenarios, thanks to stronger historical market returns and more diversified portfolios beyond the classic stock/bond split.
4% is just a starting point
Many advisors in the survey echoed Izrailo’s view: the 4% Rule is a useful starting point, not an immutable law. It provides structure for retirees who want a simple, conservative baseline, but real-world planning should be flexible and personalized.
Izrailo himself uses 4% as a baseline for U.S. investors and then adjusts up or down after considering market volatility, portfolio performance, and expected longevity. For Canadian clients he often starts lower—around 3.5%—to reflect tax differences, RRIF withdrawal rules and currency or inflation divergences between Canadian and U.S. portfolios.
Toronto wealth advisor Matthew Ardrey, who wasn’t part of the original roundup, stressed that rules of thumb can’t replace a personalized decumulation plan. After 25 years working with retirees, he prefers a detailed financial plan tailored to each person’s goals and priorities. That plan shows how to fund a dream vacation, help adult children, or preserve capital, and it can be updated as circumstances change.
Tour operator Nassira Sennoune praised Bengen for turning a rigid formula into a more flexible framework that emphasizes experience, adaptability and peace of mind. Her summary: retirees should treat savings as a source of freedom rather than fear, adjusting withdrawals to match personal goals, market performance and the natural flow of retirement phases.
Winnie Sun, a financial educator with more than 20 years of experience, starts with 4% and adjusts based on spending behavior and market moves. She notes that fear of exceeding a calculated withdrawal rate can cause people to skip meaningful experiences even when portfolios have grown; tax-efficient withdrawal sequencing is a common and often overlooked issue.
James Inwood, an insurance broker in Oakville, observed that unexpected medical bills can disrupt a fixed withdrawal rate. His advice: maintain a cash buffer and revisit your withdrawal rate every few years rather than locking it in indefinitely.
Broader asset allocation
Bengen now recommends wider diversification than his original 50% U.S. large-cap stocks / 50% intermediate bonds mix, with small allocations to international equities and small-cap stocks. Lisa Cummings, an attorney, notes Bengen’s claim that broader diversification can lift the safe withdrawal rate toward the mid-4% range in favorable scenarios, though worst-case outcomes remain lower.
Because retirees today face higher inflation and longer life expectancies, Cummings advises a two-year cash cushion to cover prolonged market downturns and suggests a flexible withdrawal band—roughly 3.5% to 4.5%—rather than a single fixed percentage.
David Fritch, a CPA with decades of experience advising small business owners, found the 4% Rule loses relevance when retirement income includes business sale proceeds, real estate, or other irregular cash flows. For many clients, guaranteed income and non-portfolio sources reduce reliance on a fixed percentage; some retirees effectively withdraw only 2–3% from portfolios once pensions, annuities and other income are layered in.
Late-career income fluctuations can change calculations
Fred Z. Poritsky points out that if retirees continue earning—through consulting, part-time work, or small businesses—they can often tolerate higher withdrawal rates for those active years, perhaps in the 5–6% range, because extra earnings reduce pressure on the portfolio.
Executive recruiter Mohammad Haqqani argues the main flaw of the 4% Rule is behavioral: it assumes a smooth, inflation-adjusted spending pattern for 30+ years, but retirement typically has phases. People tend to spend more during active “go-go” years, slow down later, and then face higher health-related costs in their final years. The key variable, he says, is self-awareness about when you’ll actually want to spend.
Wealth manager Alajahwon Ridgeway highlights the sequence-of-returns risk: taking withdrawals during a market downturn can exacerbate losses and harm long-term outcomes. He recommends annual reassessment of withdrawal rates and uses the 4% Rule primarily to answer the fundamental question, “Do I have enough to retire?”
My own take on the rule
After collecting these insights, my view hasn’t changed much from my earlier column. The 4% Rule is a helpful, simple starting point that helps people avoid under-saving. It is not a one-size-fits-all prescription.
If you worry about extreme longevity or runaway inflation, dialing the starting point down to 3% or lower is reasonable. If you have an inflation-indexed defined benefit pension, the 4% conversation may be less relevant to your situation.
For those without DB pensions who must manage their own retirement income, beginning projections with a version of the 4% Rule—adjusted for taxes, asset mix and guaranteed income sources—remains pragmatic. If you choose to annuitize part of your nest egg, the provider will dictate the payout amount, which can simplify your withdrawal planning.
The Rule also works in the other direction. If you adopt Bengen’s suggested adjustments—wider diversification, thoughtful sequencing, and a cash cushion—you may find opportunities to enjoy higher withdrawals in your early retirement years when markets and personal circumstances allow. In short, the 4% Rule is an excellent first step: clear, conservative and adaptable.
Read more about Retired Money:
- Who you gonna trust: Barry Ritholtz or Jim Cramer?
- Why retirement planners are getting defensive
- How financial journalists plan their own retirement
- Retirement planning advice for people who don’t use an advisor