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The guy who wrote it doesn’t use 4% anymore either
I Read the Paper That Created the 4% Rule
The Number Everyone Quotes Isn’t In It!
I’ve built my entire early-retirement plan on a number I’d never actually verified.
Twenty-five times annual expenses. Withdraw 4% a year. Adjust for inflation. Don’t run out of money. I’ve typed that math into a spreadsheet more times than I can count, and until last month I had never read the paper it came from.
So I read it. Determining Withdrawal Rates Using Historical Data, William Bengen, Journal of Financial Planning, October 1994. Ten pages. Free online if you go looking.
Three things surprised me, and the third one changed how I think about my own timeline.
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1. The number in the paper isn’t 4%
Bengen’s actual finding was 4.15%. That was the worst-case survivable withdrawal rate across every 30-year retirement start date in his data — what he later called the “SAFEMAX.” Somewhere between the journal page and the internet, it got rounded down to a cleaner 4%, and the clean version is what stuck.
