3.82
Forty Years of Numbers — And Now the Big Firms Agree
For four decades I have run retirement income projections the old-fashioned way — testing assumptions, stress-testing markets, looking at inflation cycles, tax impacts, longevity, and human behavior. Year after year my calculations kept landing at 3.82 percent as a prudent starting withdrawal rate for retirees who want stability without constantly worrying about running out of money.
Recently I came across a Morningstar research summary that caught my attention. It said:
“For retirees seeking to take a fixed real withdrawal from their portfolios (for example, a starting percentage with that dollar amount adjusted thereafter for inflation), our latest research suggests that a 3.9% starting withdrawal rate was ‘safe’ for retirees who want to set their starting withdrawal amount and never look back.”
That is essentially the same number I have been discussing for decades. Round 3.82 percent upward and you land right at 3.9 percent. Different paths, similar conclusion.
This matters because retirees are often told they can withdraw more. Sometimes much more. Higher withdrawal assumptions may work during strong markets, but retirement planning is not about hoping markets cooperate. It is about building a structure that survives uncertainty.
Then there is the Required Minimum Distribution issue. Once RMDs begin, withdrawals are dictated by IRS tables whether you need the money or not. In later years those percentages often exceed what many planners would consider a conservative withdrawal rate. That does not automatically create a crisis, but it does require coordination between tax strategy, income needs, and portfolio design.
Here is the larger point.
Experience matters. Long-term observation matters. Running real numbers across multiple market cycles matters. Sometimes an individual practitioner working steadily for decades arrives at the same conclusion as a large research organization with vast resources. That should not surprise anyone who understands how financial reality works.
If you are retired or nearing retirement, the goal is not chasing returns. The goal is sustainable income, manageable volatility, and confidence that your money lasts as long as you do.
I have been working these numbers a long time. The question worth asking is simple: Why are you not working with me, someone who actually lives in those numbers every day?