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4% Withdrawal Rule Adjusted Downward Due to Lower Market Expectations

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Retirement Planning,4% Rule,Withdrawal Rate

The 4% withdrawal rule, a popular retirement strategy, has been adjusted to 3.7% for 2025 due to lower expectations for long-term returns in the stock, bond, and cash markets. Morningstar analysts warn that retirees may need to proceed cautiously and consider a more flexible approach to annual spending.

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.

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4% Withdrawal Rule Adjusted Downward Due to Market ExpectationsThe 4% withdrawal rule, a popular retirement strategy, has been adjusted downward to 3.7% for 2025 due to lower expectations for long-term stock, bond, and cash returns. While still a 'reasonable starting point,' retirees can consider individual circumstances and adjust their withdrawal rates accordingly.
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4% Withdrawal Rule Adjusted Lower Due to Market ExpectationsThe 4% rule, a popular retirement strategy, has been adjusted downward to 3.7% for 2025 due to lower long-term return expectations for stocks, bonds, and cash.
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4% Withdrawal Rule Adjusted Down for 2025 Amid Lower Market ReturnsThe 4% withdrawal rule, a popular retirement strategy, has been adjusted to 3.7% for 2025 due to lower long-term expectations for stock, bond, and cash returns. Morningstar analysts warn that a 50-50 portfolio split may experience less growth, necessitating a more cautious approach for new retirees. While the rule provides a general guideline, retirees can adapt their withdrawals based on their flexibility with spending.
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