The 4% withdrawal rule is a popular retirement strategy that helps investors withdraw money safely from their accounts, with low odds of running out of money later.
But that"safe" withdrawal rate declined to 3.7% in 2025, from 4% in 2024, due to long-term assumptions in the financial markets, according to MorningstarSpecifically, expectations for stock, bond and cash returns over the next 30 years declined relative to last year, according to Morningstar analysts. This means a portfolio split 50-50 between stocks and bonds would have less growth.
Historically — over a period from 1926 to 1993 — the formula has yielded a 90% probability of having money remaining after a three-decade-long retirement, according to Morningstar. For example, retirees generally spend less in the later years of retirement, in inflation-adjusted terms, Benz said. If retirees can enter retirement and be OK with spending less later, it means they can safely spend more in their earlier retirement years, Benz said.