You Could Spend WAY More Than the 4% Rule Suggests (Says the Man Who Created It)

Financial planning’s most famous guideline just got an upgrade. In this exclusive interview, James speaks with Bill Bengen—the MIT-trained engineer turned financial advisor who created the 4% rule—about his updated research and what it means for retirees today.

Bengen reveals that diversification alone can raise the safe withdrawal rate to 4.7%, and under certain market conditions, retirees may be able to withdraw 6%, 7%, or even 8% annually. The original 4% rule was never meant to reflect average scenarios. It was built from the worst-case retirement timing in modern history. Even then, a 4% withdrawal strategy lasted 30 years. Bengen’s findings show that across history, the average sustainable withdrawal rate has exceeded 7%, suggesting many retirees could be living more cautiously than necessary.

In this conversation, James and Bengen discuss the two factors that matter most when determining safe withdrawals: inflation expectations and stock market valuations at retirement. They also explore why downturns don’t usually require major changes to a plan, but inflation threats demand immediate attention.

Rather than focusing on a single “magic number,” Bengen emphasizes a process-oriented approach—one that starts with your circumstances and considers the economic environment before setting a withdrawal strategy.

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⏱Timestamps:⏱
00:00 - Introduction to the 4% Rule
00:24 - Meet Bill Bengen: The Man Behind the 4% Rule
00:55 - The Origins of the 4% Rule
02:43 - Challenges and Misconceptions of the 4% Rule
04:54 - Research and Findings
07:20 - Practical Applications and Future Research
18:30 - Bill’s Excitement for the New Book
19:40 - Final Thoughts and Disclaimer
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