What Is a Safe Retirement Withdrawal Rate? Why 3.9% and 4% Are Starting Points

A safe withdrawal rate is a starting percentage, not a promise. Morningstar’s December 2025 research puts its base case at 3.9% for a 30-year retirement, but the figure moves with markets, time horizon, spending flexibility, other income and taxes. This guide explains what the number measures, where it stops, and what it leaves out for people planning to retire before Medicare or required distributions begin.

What is a safe withdrawal rate?

A safe withdrawal rate is the percentage of a portfolio you take out in the first year of retirement, with later withdrawals raised for inflation, that research suggests would last a chosen number of years in most simulated markets. “Safe” describes a modeled probability, not a guarantee. The well-known 4% rule is one example.

Two details are easy to miss. First, the percentage applies only to the first year. After that, the dollar amount is raised for inflation, no matter what the portfolio does. Second, a rate is an input to a plan, not the plan. It says how much comes out and nothing about which account it comes from, what it costs in tax, or what happens in a weak year. Our guide to retirement income architecture covers that larger picture.

What does Morningstar’s 3.9% actually measure?

Morningstar’s 2025 research estimates 3.9% as the highest safe starting withdrawal rate for a new retiree who wants steady, inflation-adjusted spending from a portfolio, assuming a 30-year retirement and a 90% probability of having money left at the end. It uses forward-looking return and inflation assumptions and leaves out Social Security and other income.

That sentence carries several assumptions. Here is what each one means when you read the number:

Morningstar also says the figure is not meant to prompt people who are already retired to raise or lower their spending from year to year. It is an estimate for someone starting retirement now. You can read the full study at Morningstar: What’s a Safe Retirement Withdrawal Rate for 2026?, published December 3, 2025.

Why does the safe withdrawal rate change from year to year?

Because the inputs change. Morningstar’s base case was 3.3% in 2021, 3.8% in 2022, 4.0% in 2023, 3.7% in 2024 and 3.9% in 2025, as expected returns, bond yields, valuations and inflation assumptions moved. The estimate is a forecast-based starting point, so it can shift even when your own plan has not changed.

Method matters too. Morningstar says it changed how it builds its return assumptions this year, blending top-down measures with bottom-up analyst views, which nudged expected returns up for most asset classes. A different forecaster, or a different method, could produce a different figure from the same market. That is a reason to treat any single published rate as one reasonable view, and to expect the next edition to differ.

How does your retirement horizon change the rate?

A longer retirement generally lowers the sustainable starting rate, and a shorter one raises it. Morningstar’s 3.9% assumes 30 years, and its advisor-facing research cites about 3.5% for a 35-year horizon. Someone who retires at 57 or 60 may need to plan for 35 years or more, so the 30-year figure may not fit.

That connection is why this question matters for early retirees. Retire at 57, and a portfolio may need to fund decades beyond what a 65-year-old plans for, which is covered in our guide to retiring at 57. For a married couple, the relevant horizon is often the longer-lived spouse’s. Morningstar’s 35-year figure appears in its advisor webinar on boosting retirement spending.

Horizon is only one part of retiring early. Before 59½, access rules also matter, and the IRS generally applies a 10% additional tax to early distributions unless an exception applies. Our posts on the Rule of 55 and retiring at 60 versus 62 cover those mechanics.

Is 5% a safe withdrawal rate?

It depends on how the 5% is used. As a fixed, inflation-adjusted starting rate, 5% sits above Morningstar’s 3.9% base case, which means a higher chance of running short under its assumptions. As a flexible rate that moves with the portfolio, higher starting rates are possible, but spending can fall in weak markets.

Morningstar’s research concluded that retirees willing to tolerate some fluctuation in spending can start near 6%. How much flexibility a household really has depends on how much of its budget is fixed, such as housing, insurance and health care, and how much is discretionary. It also depends on whether other income covers those fixed costs. A rate that works on paper can fail in practice if the household cannot actually cut spending in a bad year.

How do fixed and flexible withdrawal strategies compare?

A fixed strategy sets the first-year dollar amount and raises it for inflation, giving steady spending but a lower starting rate. Flexible strategies, such as constant percentage or endowment methods, adjust withdrawals as the portfolio changes, supporting higher starting rates in Morningstar’s research while letting spending rise and fall.

Morningstar tested nine strategies in all, and its analysts note that each involves trade-offs, such as simplicity against a higher starting rate. One finding stands out: guardrail-type systems tend to work better when paired with a substantial, predictable income floor. Morningstar’s overview is at Morningstar’s comparison of strategies for boosting starting withdrawal rates.

What happens if returns are poor or inflation is high early in retirement?

Early experience matters more than the average. Morningstar found that retirees who met poor returns in the first five years and did not cut spending were much more likely to exhaust savings than those who saw positive early returns. High inflation early in retirement had a similar effect unless retirees adjusted. This is sequence of returns risk.

A single average return hides this problem. Two households can earn the same average over 30 years and end up in very different places because of when the good and bad years arrive. The levers are spending flexibility, a cash reserve, and income that does not depend on markets. Our entries on sequence of returns risk and what it means in practice explain the mechanics.

How do Social Security and other income change the math?

Morningstar’s 3.9% covers the portfolio only. Social Security, a pension or work income pay for part of spending, which can change how a household uses the portfolio. Morningstar found that delaying Social Security pairs well with flexible withdrawals, though larger lifetime income generally leaves less for heirs.

For someone retiring at 60, the years before Social Security starts can require a higher draw from savings than the years after. A single percentage cannot show that. Claiming age also changes the equation: the Social Security Administration pays 70% of the full retirement age benefit to someone born in 1960 or later who claims at 62, a permanent reduction, while delaying raises the monthly benefit. Our guide to Social Security timing covers that decision, and the claiming choice and the withdrawal plan should be set together.

How do taxes and RMDs change a withdrawal rate?

A withdrawal rate counts dollars leaving the portfolio, not dollars you keep. Pre-tax withdrawals add to taxable income, which can affect your bracket, how much Social Security is taxed and Medicare premiums two years later. Required distributions later add a floor, and that floor can exceed a fixed withdrawal rate.

An RMD is the prior year-end balance of a pre-tax account divided by a distribution period from the IRS Uniform Lifetime Table. Calculated from that table, the distribution is about 3.8% of the balance at 73 (period 26.5), about 4.1% at 75 (24.6) and about 5.0% at 80 (20.2). Those figures apply to pre-tax account balances, and different tables apply in some situations, such as a spouse more than 10 years younger who is the sole beneficiary. The IRS explains the starting ages, which are 73, or 75 for anyone born in 1960 or later.

Morningstar has noted the same collision in When Safe Withdrawal Rates Collide With RMDs: RMDs can run above 3.9% later in retirement. The planning response is usually to look at taxes earlier, in the years before distributions begin. Our guides to RMD exposure, withdrawal sequencing and the first ten years tax window go deeper, and your CPA should model the numbers for your own return.

What might a hypothetical couple weigh?

Imagine a couple, both 60, where one is a senior executive about to retire. They hold a pre-tax 401(k), a taxable brokerage account, a smaller Roth balance, vested stock awards and a deferred compensation payout schedule. They want to test whether a single published withdrawal rate fits them.

Here is how they might work through it:

1. Separate essential from discretionary spending. Housing, insurance and health coverage are hard to cut. Travel and gifts are easier to adjust.
2. Decide when each spouse might claim Social Security. That sets how many years savings carry the household alone.
3. Choose how much of the portfolio draw is fixed and how much flexes. A fixed draw for essentials with a flexible draw for the rest is one common structure.
4. Map which accounts fund each bridge year. Taxable income from pre-tax withdrawals and deferred compensation affects the bracket, coverage costs and later Medicare premiums.
5. Test a weak first five years. What would they cut, and could they?

Their answer may land above or below any published rate. This example is hypothetical, for illustration only, and is not a projection or a recommendation for any household. Results are not guaranteed.

What mistakes do people make with safe withdrawal rates?

• Treating the rate as a rule for every year. The percentage applies to the first year, and the plan is reviewed from there.
• Using a 30-year number for a 35-year retirement. Retiring at 57 or 60 can change the horizon.
• Comparing rates built on different assumptions. A figure from one forecaster is not comparable to another’s without the method.
• Ignoring taxes and RMDs. A pre-tax dollar withdrawn is not a dollar spent.
• Adopting a flexible strategy without being able to flex. Spending cuts have to be realistic.
• Leaving out Social Security and bridge years. A single percentage hides years when savings carry more of the load.
• Setting the rate once and never revisiting it. Markets, health and spending change.

What are the limits and risks?

• The numbers are modeled, not predicted. A 90% probability of success still allows for a shortfall, and actual markets may differ from any model.
• Assumptions differ. Morningstar’s figures reflect its own forward-looking assumptions and a generic portfolio. Your portfolio and circumstances are different.
• Flexible strategies need real flexibility. They raise the starting rate by accepting changes in spending, and they may leave less for heirs.
• Higher withdrawals may deplete savings sooner. This is especially true if poor returns or high inflation arrive early.
• Taxes and rules change. Brackets, thresholds, RMD ages and Medicare premium rules are set by law and can change.
• This is education, not advice. A rate from published research is not a recommendation for your situation. Retirement Roadmap Experts is not affiliated with Morningstar, and Morningstar has not reviewed or endorsed this article.

Because taxes sit inside nearly every withdrawal decision, coordinate with your own CPA before you set a rate.

Source and as-of date

The mechanics above reflect these sources as read on October 21, 2026:

• Morningstar: What’s a Safe Retirement Withdrawal Rate for 2026?, published December 3, 2025, for the 3.9% base case, its assumptions, the yearly history, flexible strategies, early-return findings and Social Security findings.
• Morningstar advisor webinar: Strategies for Boosting Retirement Spending, published March 10, 2026, for the 35-year horizon figure.
• Morningstar: comparison of strategies for boosting starting withdrawal rates, published February 17, 2026, for the comparison of strategies.
• Morningstar: When Safe Withdrawal Rates Collide With RMDs, published February 5, 2026.
• IRS Publication 590-B, Appendix B, Uniform Lifetime Table and IRS Retirement topics: Required minimum distributions, for the RMD formula and starting ages. Percentages shown are our own calculation from the table.
• IRS Topic no. 558, for the 10% additional tax before 59½.
• Social Security Administration: Born in 1960 or later, for the age-62 reduction.

Rules, assumptions and thresholds change, and Morningstar updates its research annually, so confirm current figures with the sources above, your plan administrator and your tax professional before acting.

What should you do next?

A published rate can tell you what one set of assumptions produced. It cannot tell you what your retirement date, accounts, spending and tax picture produce. That is the question inside our Early Retirement Feasibility work, which tests a target date against spending, taxes and market risk together. Our guide to withdrawal sequencing and our answer on which account to withdraw from first describe the ordering question that sits underneath the rate.

A good first step is the free Risk Analysis, which takes a few minutes and gives you something concrete to bring to a conversation. When you are ready to look at your own plan, schedule a free 30-minute conversation with Robert Boeck, with no products and no pitch, before you settle on a withdrawal rate, not after.