Smaller Withdrawals: Why 3.3% Is The Drawdown Dream

(20-minute read) As rules of thumb go, this one is simple enough to execute, and could have a visible impact on your retirement

Christine Benz 16 November, 2021 | 2:37PM John Rekenthaler
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A 4% starting withdrawal rate, with annual inflation adjustments to that initial amount thereafter, is often cited as a "safe" withdrawal system for new retirees.

Financial planner Bill Bengen first demonstrated in 1994 that such a system had succeeded over most 30-year periods in modern market history, and in the nearly 30-year time period since Bengen's research, a 4% starting withdrawal rate would have been too modest. But is such a withdrawal system safe today, given the confluence of low starting bond yields and relatively high equity valuations?

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About Author

Christine Benz

Christine Benz  is director of personal finance at Morningstar and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances.