How Much Can You Safely Withdraw in Retirement?

Luke A. Palmer, CFP®, AAMS®, CRPS®, AWMA®, Owner and CEO

2 January 2026

The question weighs on nearly every affluent investor approaching retirement: how much can I safely withdraw in retirement without depleting my retirement savings? For individuals and families with investable assets of $5 million to $30 million, this question becomes particularly nuanced. Your retirement income planning must account for complex tax situations, concentrated positions, illiquid assets, and retirement periods that may extend well beyond the traditional 30-year assumption.

The direct answer is this: Most retirees with diversified investment portfolios can sustainably withdraw between 3.9% and 4.7% of their initial portfolio balance, adjusted annually for inflation, with high confidence their assets will last 30 years. However, this range represents a starting point, not a prescription. Your optimal sustainable withdrawal rate depends on your specific circumstances, including your other income sources, spending flexibility, tax situation, and tolerance for adjusting your lifestyle during market downturns.

This article examines the latest research on retirement withdrawal rates and provides a framework for determining an appropriate retirement spending strategy for your situation.

What Is a “Safe” Withdrawal Rate?

A safe withdrawal rate is the percentage of your retirement portfolio you can withdraw each year, typically adjusted for inflation, without depleting your assets over your retirement horizon. The concept emerged from research seeking to answer a deceptively simple question: If historical market conditions repeated, what initial withdrawal amount would have allowed retirees to maintain their spending power without running out of money?

The foundational research came from financial advisor William Bengen, whose 1994 analysis introduced what became known as the “4% rule.” By testing historical market returns from 1926 through 1992, Bengen determined that a 4% initial withdrawal rate, with subsequent withdrawals adjusted for inflation, would have survived every 30-year period in his dataset, including retirement periods that began just before the Great Depression and the stagflation of the 1970s.¹

Bengen recently updated his research in his August 2025 book, A Richer Retirement. By incorporating a more diversified asset allocation (55% stocks, including small- and mid-cap exposure, 40% bonds, and 5% cash), he now recommends a starting withdrawal rate of 4.7% for a 30-year retirement. This meaningful increase could translate to thousands of additional dollars annually for retirees drawing from their retirement savings.²

Why the Traditional 4% Rule May Not Apply to High Net Worth Retirees

While the 4% rule provides a useful benchmark, it was designed for a hypothetical “average” retiree with a simple investment portfolio of U.S. stocks and bonds. For investors with more complex financial situations, several factors may warrant a different approach to retirement income planning.

Traditional Approach vs. Personalized Framework

Traditional 4% Rule Assumptions	Sub UHNW Considerations
30-year retirement horizon	May need 35 to 40+ years for early retirees or couples
Simple stock/bond asset allocation	May include concentrated positions, private investments, and real estate
No other guaranteed income	Social Security, pensions, and rental income may cover essential expenses.
Fixed inflation-adjusted spending	Flexibility to reduce discretionary spending during market downturns
No legacy goals	Often significant wealth transfer objectives

Morningstar’s 2025 “State of Retirement Income” research found that while a baseline 3.9% withdrawal rate provides high confidence for rigid spending plans, retirees who can adjust their withdrawal amount based on portfolio performance could safely start at rates as high as 5.7%.³ This flexibility premium represents a substantial potential increase in retirement lifestyle for those willing to adapt.

How Does Sequence of Returns Risk Affect Your Retirement Portfolio?

Sequence of returns risk is the danger that market downturns early in retirement, when you are withdrawing from your portfolio, can permanently impair your ability to maintain your spending, even if average returns over your entire retirement are acceptable. This risk represents perhaps the most significant threat to retirement income sustainability.

Consider two retirees who each experience an average annual return of 7% over 30 years. The retiree who experiences strong returns in years one through ten and weak returns in years 21 through 30 finishes with significantly more retirement savings than the retiree who experiences the reverse, even though their average returns are identical. Why? Because early losses compound against you when you are simultaneously withdrawing funds, while early gains provide a cushion that continues to grow.

As Bengen noted in his updated research, “If you endure a substantial bear market early in retirement, it drives down your withdrawal rates, because it sucks a lot out of the portfolio at the same time that you’re drawing from it.”⁴ This insight underscores why the first decade of retirement often determines long-term success for your retirement portfolio.

For sub-UHNW investors, mitigating sequence-of-returns risk may involve maintaining several years of spending in lower-volatility assets, implementing a “bucket strategy” that segregates near-term spending needs from long-term growth assets, or adopting flexible spending rules that reduce your withdrawal amount following market downturns. Our approach to strategic financial planning considers these strategies within the context of your complete financial picture.

What Role Does Longevity Risk Play in Sustainable Withdrawals?

Longevity risk planning addresses the possibility that you or your spouse will live significantly longer than average life expectancy, requiring your investment portfolio to sustain spending for longer than anticipated. For affluent retirees with access to quality healthcare and generally healthy lifestyles, this risk is particularly relevant.

Current data reveals that life expectancy at age 65 in the United States has reached 19.5 years, meaning the average 65-year-old can expect to live to approximately 84.5⁵. However, averages obscure significant upside risk:

For a 65-year-old couple, there is a 50% probability that at least one spouse will reach age 93⁶
There is a 25% probability that at least one spouse will reach age 97⁶
Non-smoking individuals in excellent health may have even longer expected lifespans

These statistics suggest that couples should consider planning for retirement periods of 30 to 35 years at minimum, with some advisors recommending a 40-year horizon for early retirees or those in excellent health. For 50-year retirement scenarios, relevant for those retiring in their early 50s, research indicates a safe withdrawal rate closer to 3.5% to 4.2%.⁷

Extended longevity also amplifies the importance of protection strategies. Healthcare costs and potential long-term care needs can dramatically alter spending requirements in later retirement years. Our guide on protecting your assets from nursing home costs examines how these risks intersect with retirement income planning.

Tax-Efficient Withdrawal Sequencing

For sub-UHNW investors, the question is not just how much to withdraw from your retirement portfolio. It is also where to withdraw from. Tax-efficient withdrawals can meaningfully extend portfolio longevity by minimizing the tax drag on your assets.

The conventional wisdom suggests withdrawing from taxable accounts first, then tax-deferred accounts (traditional IRAs and 401(k)s), and finally tax-free accounts (Roth IRAs). However, this rigid approach often leaves money on the table.

A more sophisticated retirement spending strategy considers:

Strategic Roth conversions: Converting traditional IRA assets to Roth accounts during years when your marginal tax rate is lower, such as the gap between retirement and Social Security claiming or required minimum distributions, can reduce lifetime taxes while providing tax-free growth for your retirement savings.
Qualified Charitable Distributions (QCDs): For charitably inclined retirees over age 70½, directing IRA distributions (up to $105,000 annually in 2025) to qualified charities satisfies required minimum distributions without increasing taxable income.
Tax bracket management: Strategically “filling” lower tax brackets by realizing gains or taking IRA distributions in years when income would otherwise be below bracket thresholds.
Asset location optimization: Holding tax inefficient investments (bonds, REITs) in tax advantaged accounts while keeping tax-efficient holdings (growth stocks, municipal bonds) in taxable accounts.

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Building a Flexible Distribution Framework

Rather than rigidly adhering to a single withdrawal rate, many sophisticated investors benefit from a dynamic approach that adjusts based on investment portfolio performance and personal circumstances.

The Guardrails Approach: This method establishes upper and lower bounds around your target withdrawal rate. When your withdrawal rate rises above the upper guardrail (indicating poor portfolio performance), you reduce your withdrawal amount by a predetermined percentage. When your withdrawal rate falls below the lower guardrail (indicating strong performance), you give yourself a raise. For example, with a 5% target withdrawal rate and 20% guardrails, you would adjust spending if your actual withdrawal rate exceeded 6% or fell below 4%.

Income Floor Strategy: This approach separates essential expenses (housing, healthcare, food) from discretionary spending (travel, entertainment, gifts). Essential expenses are covered by guaranteed income sources, including Social Security, pensions, or income annuities, while retirement portfolio withdrawals fund discretionary lifestyle. This structure provides psychological security while allowing flexibility in variable expenses.

The right framework depends on your specific situation, including your other retirement income sources, spending flexibility, legacy objectives, and psychological comfort with variable income. What matters most is establishing a thoughtful system that you can maintain through market cycles, including inevitable market downturns.

How Asset Allocation Influences Your Withdrawal Strategy

Your asset allocation plays a critical role in determining an appropriate withdrawal amount. Research consistently demonstrates that portfolios with at least 50% allocated to equities have historically supported higher sustainable withdrawal rates than bond-heavy alternatives, despite their greater short-term volatility.

This finding may seem counterintuitive. After all, bonds provide stability and predictable income. However, over extended retirement periods spanning 30 years or more, the growth potential of equities helps your retirement savings keep pace with inflation and replenish after market downturns. A portfolio too heavily weighted toward fixed income may provide psychological comfort but often fails to sustain purchasing power over decades.

That said, optimal asset allocation evolves throughout retirement. Many advisors recommend gradually reducing equity exposure as you age, though the conventional “age in bonds” rule has fallen out of favor. A more nuanced approach considers your total financial picture, including guaranteed income sources, spending flexibility, and legacy objectives.

Key Takeaways for Your Retirement Income Planning

Start with research-based guidelines, then personalize: Current research supports initial withdrawal rates between 3.9% and 4.7% for 30-year retirement periods, but your optimal rate depends on your specific circumstances, income sources, and flexibility.
Plan for a longer retirement than you expect: With a 50% chance that one member of a 65-year-old couple will reach age 93, planning for 30 to 35+ years provides prudent margin for your retirement savings.
Recognize the outsized importance of early retirement years: Sequence of returns risk makes investment portfolio performance in your first decade of retirement disproportionately important. Consider maintaining liquid reserves and spending flexibility to weather early market downturns.
Integrate tax planning with withdrawal strategy: Tax-efficient withdrawals, including strategic Roth conversions and QCDs, can meaningfully extend retirement portfolio longevity.
Maintain appropriate asset allocation: Your asset allocation should balance growth potential against volatility tolerance, recognizing that overly conservative portfolios may not sustain purchasing power over extended retirement periods.
Adopt a flexible, rules-based approach: Dynamic withdrawal strategies that adjust your withdrawal amount based on market conditions often outperform rigid spending rules while providing clear guidelines for decision making.

Moving Forward With Confidence

Determining how much you can safely withdraw in retirement is not a one time calculation but an ongoing process that evolves with market conditions, tax laws, and your personal circumstances. For investors with complex financial situations, the interplay between withdrawal strategy, asset allocation, tax planning, and legacy objectives requires coordinated analysis.

The good news: Recent research suggests that many retirees can sustainably spend more than the traditional 4% rule implies, particularly those with flexibility in their spending, diversified investment portfolios, and guaranteed income covering essential expenses. Understanding these nuances can help you live the retirement you have earned while preserving your retirement savings for the goals that matter most to you.

Estate planning should work in concert with your distribution strategy. Our discussion of why your estate plan might not protect your legacy explores how these disciplines intersect for comprehensive wealth management.

Important Disclosures

This article is provided for informational and educational purposes only and does not constitute personalized investment, tax, or legal advice. The information presented reflects general principles and should not be construed as a recommendation to pursue any particular financial strategy. Individual circumstances vary significantly, and strategies appropriate for one investor may not be suitable for another.

Past performance does not guarantee future results. All investing involves risk, including the potential loss of principal. Historical withdrawal rate research is based on past market conditions that may not repeat. Future returns and inflation rates are uncertain and may differ materially from historical averages.

The withdrawal rates discussed in this article are based on research assumptions that may not match your circumstances. Your appropriate withdrawal rate depends on your specific financial situation, goals, risk tolerance, and other factors. Before implementing any retirement income strategy, consult with qualified financial, tax, and legal professionals who understand your complete situation.

Commonwealth Financial Network® does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.

References

Bengen, W. P. (1994, October). Determining withdrawal rates using historical data. Journal of Financial Planning, 7(4), 171–180. Original research establishing that a 4% initial withdrawal rate, adjusted for inflation, survived all historical 30-year periods from 1926 to 1992.
Bengen, W. P. (2025). A richer retirement: Supercharging the 4% rule to spend more and enjoy more. Wiley. Updated research recommending a 4.7% safe withdrawal rate based on a diversified portfolio of 55% equities (including small and mid cap), 40% bonds, and 5% cash.
Arnott, A. C., Benz, C., & Ptak, J. (2025, December). The state of retirement income: 2025. Morningstar Research. Finding that a 3.9% starting withdrawal rate provides high confidence for fixed spending, while flexible spending strategies can support rates up to 5.7%.
Backman, M. (2025, December 18). Early retirees may be ‘cheating themselves,’ says 4% rule creator—they can likely withdraw more money each year. CNBC Make It. https://www.cnbc.com/2025/12/18/why-early-retirees-may-be-cheating-themselves-says-4percent-rule-creator.html. Interview with William Bengen discussing the impact of early retirement bear markets on withdrawal sustainability.
Arias, E., & Xu, J. (2024). United States life tables, 2023. National Vital Statistics Reports, 73(2). Centers for Disease Control and Prevention. Data showing life expectancy at age 65 reached 19.5 years (84.5 total), representing a 0.6 year increase from 2022.
Society of Actuaries & American Academy of Actuaries. (2025). Longevity illustrator [Online calculator]. https://www.longevityillustrator.org. Actuarial data indicating a 50% probability that at least one member of a 65-year-old couple will reach age 93, and a 25% probability of reaching age 97.
The Poor Swiss. (2025, August 10). Updated Trinity study for 2025: More withdrawal rates! https://thepoorswiss.com/updated-trinity-study/. Analysis extending original Trinity Study methodology through 2024 market data, finding that 50-year retirement periods require withdrawal rates of 3.5% to 4.2% for high probability of success.

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