The most tested rule in retirement planning
For over a century of US market data, one simple guideline has held up better than almost any financial prediction: withdraw 4% of your portfolio in year one, adjust for inflation each year, and your money lasts 30 years.
Key findings
Starting balance of $1,000,000 with annual withdrawals of $40,000 (4%), adjusted for inflation. A 60/40 stock-bond portfolio. Tested across every possible 30-year window in the historical record.
The result: a 99% success rate. Only a single starting year — 1966 — saw the portfolio run dry before the 30-year mark.
Historical context
The 1966 failure wasn't random. Retirees who started that year faced flat stock returns through the 1970s while inflation surged, eroding purchasing power faster than the portfolio could recover. It was the worst possible combination of sequence-of-returns risk.
Every other cohort survived. Most did more than survive — the median outcome was a final portfolio of $1.5 million, meaning the typical retiree ended 30 years wealthier than they started.
What this means for retirees
The 4% rule has weathered world wars, the Great Depression, stagflation, dot-com crashes, and the 2008 financial crisis. Its near-perfect track record explains why it remains the default benchmark. But the 1966 failure is a reminder: sequence risk — poor returns in your first few retirement years — can break even conservative plans.
