Safe Withdrawal Rates: A Guide for Early Retirees

47 Pages Posted: 11 Mar 2017

Date Written: February 19, 2017


When talking about withdrawal rates in retirement it's hard to ignore the 4% rule. The origin of this rule goes back to the work of Bengen (1994, 1996, 1997, 2001) and Cooley, Hubbard and Walz (1998, 2011), more commonly known as the Trinity Study. The Trinity Study showed that withdrawing 4% of the portfolio value at the beginning of retirement and subsequently adjusting the withdrawals for inflation, will likely sustain a 30-year retirement in a portfolio comprised of 50-100% stocks and 0-50% bonds. This result is relevant to the average retiree with a horizon of only 30 years and not the typical early retiree with a much longer horizon, though. We perform extensive simulations and case studies targeted at early retirees and show that the longer horizon and today's expensive equity valuations will likely necessitate a lower initial withdrawal rate.

Keywords: retirement planning, retirement, systematic withdrawals, 4% rule, safe withdrawal rates

JEL Classification: D14, G11, G17

Suggested Citation

EarlyRetirementNow, Ern, Safe Withdrawal Rates: A Guide for Early Retirees (February 19, 2017). Available at SSRN: or

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