From 4% Rule to 4.7%: A Small Change with Big Retirement Impacts

Last Updated on September 22, 2025 by Rose Ann

Retirement planning might seem like a mountain of complicated math, but for more than 30 years, one simple formula has been guiding millions: the 4% rule.

Now, thanks to updated research and the changing markets, that figure just got a boost. The new guideline? The 4.7% rule.

Back in 1994, financial adviser Bill Bengen suggested that retirees who withdrew 4% of their savings in the first year of retirement — and adjusted that amount annually for inflation — could make their money last for three decades.

For years, it was the gold standard, offering clarity to one of the hardest questions we face: “How much can I safely spend without running out of money?”

Today, Bengen’s calculations have evolved. By expanding beyond the old half-stocks, half-bonds model to include a more diversified portfolio — stocks of every size, international holdings, bonds, and even cash — the math has changed. With modern markets and smarter strategies in play, retirees can safely draw closer to 4.7% annually.

“It’s lasted a long time because it’s memorable and it makes a very complex human problem feel a lot more manageable,” said Rob Williams of Charles Schwab.

It reflects a simple truth: retirement isn’t static. Spending needs rise and fall, markets evolve, and portfolios are far more varied than they were decades ago. A modest adjustment of less than one percent might not sound like a big deal, but stretched across 20 or 30 years of retirement, it can make a life-changing difference.

For someone with $500,000 saved, it could mean an extra $3,500 of annual spending power — enough for travel, hobbies, or simply breathing room in the budget.

Of course, the rule still has its limits. Many Americans struggle to build healthy savings, and the median household approaching retirement has just $185,000 stashed away, where even 4.7% doesn’t add up to much.

And some experts warn against relying too rigidly on any single formula, since life is unpredictable and any plan should adapt to new realities.

Still, the enduring appeal of the rule is clear: it gives people clarity amid uncertainty and helps chip away at one of retirement’s greatest fears, outliving your money. As Bengen himself noted when reflecting on his retirement: “Because the stock market has done so well, I’ve been able to adjust upwards. I’m now spending 4.9% a year.”

The lesson? Retirement rules aren’t carved in stone, but they can offer a sturdy starting point. And with the new 4.7% rule, savers approaching retirement may find a little more freedom to enjoy those golden years.

Explore the full story at USA Today and pair it with insights about withdrawal strategies. These resources provide practical ways to make your money last, while ensuring life after work remains fulfilling.