How to Set a Safe Withdrawal Rate After Retirement

3.9%. Morningstar's latest research calls that a safe starting withdrawal rate for someone retiring in 2026. It assumes a 30-year retirement, 30–50% of the portfolio in stocks, and a 90% chance the money is still there at the end. If you're working out how to set a safe withdrawal rate after retirement, 3.9% is a good place to start. Don't stop there, though. Your own rate depends on how long the money has to last, what other income you have, how much your spending can bend, and how much risk of falling short you can live with.

Here's what the number means, why the experts don't agree on it, and a step-by-step way to set your own.

The short answer: what's a safe withdrawal rate today?

A withdrawal rate is the share of your savings you take out in your first year of retirement. After that, the usual approach is to raise the dollar amount by inflation each year.

The math is simple. Divide what you take out each year by what you've saved. SmartAsset's example: taking $35,000 from $800,000 works out to about 4.3% (SmartAsset). At Morningstar's 3.9%, $1,000,000 in savings supports $39,000 in year one.

The well-known "4% rule" comes from William Bengen's 1994 research (SmartAsset). Morningstar updates its own figure every year, and it moves around:

• 2021: 3.3%
• 2022: 3.8%
• 2023: 4.0%
• 2025: 3.7%
• 2026: 3.9%

Source: Morningstar, The State of Retirement Income, published December 2025, as reported by FA Mag and Boldin.

The figure changes because Morningstar looks forward. Its estimates of future stock and bond returns shift from year to year, so the "safe" number shifts too.

What "safe" actually means

People skip this part, and it matters most.

"Safe" doesn't mean guaranteed. Morningstar calls a rate safe if the money is still there in 90% of simulated outcomes over 30 years (Morningstar). Put the other way, about one simulated retirement in ten runs short.

That 90% is a choice, and you can make a different one.

• If you want more certainty (say 95%), your starting rate goes down.
• If you accept more risk (say 80%), your starting rate goes up. You're then relying more on being able to cut spending if markets go badly.

Nothing about this is a flaw in the research. It's how the question works. A withdrawal rate is a probability, not a promise.

Why the experts give different numbers

Look this up and you'll find several figures. They aren't contradicting each other. They answer slightly different questions.

Sources: Mezzi, TheStreet, Boldin.

Bengen asks what would have survived the worst periods in history. Morningstar asks what is likely to survive based on its current market outlook. Both are reasonable questions. Which one fits better depends on whether you trust history or forecasts more, and on how much your spending can flex.

How to set a safe withdrawal rate after retirement: six steps

Most articles tell you what a withdrawal rate is. Here's a way to actually set yours.

1. Split your spending into essential and optional

Essential spending is housing, food, insurance, utilities and health care. Optional spending is travel, gifts, dining out and hobbies. You'll need this split later. Essential spending needs steady funding. Optional spending is what gives you room to adjust.

If this step feels unfamiliar, you're far from alone. 48% of workers have never estimated how much they'll need each month in retirement. Source: EBRI/Greenwald, Retirement Confidence Survey 2025, Fact Sheet 3.

2. Subtract your guaranteed income

Social Security, a pension or an annuity all cut how much your portfolio has to supply (Mezzi). Your withdrawal rate only applies to the gap between your spending and that income.

That gap is the number to focus on. A retiree whose essential costs are mostly covered by Social Security is in a very different spot from one who depends on the portfolio for everything, even if their withdrawal rates look the same.

3. Pick a realistic time horizon

The standard research assumes 30 years. That fits a 65-year-old who lives to 95. If you retire earlier, you need a longer horizon and a lower rate (Nasdaq).

Don't make it too short. About one in three 65-year-olds may live to at least 90. Source: Social Security Administration, Retirement Information for Medicare Beneficiaries, 2026. A plan that ends at 85 is quietly betting against a third of retirees. That's why the plan you build at Monte Climb runs to 95 by default, and you can push it further.

4. Choose your target odds of success

Decide what "safe" means to you. The research standard is 90%. If your essential spending depends heavily on the portfolio, you may want higher odds. If guaranteed income covers your essentials and the portfolio pays mostly for extras, lower odds may be fine, because falling short would mean fewer trips, not missed bills.

5. Decide on fixed or flexible withdrawals

Fixed withdrawals, where you take the same real amount every year, are simple and predictable. The price is a lower starting rate.

Flexible methods let you start higher. Morningstar found that methods like constant-percentage and endowment-style withdrawals support starting rates of about 5.7% (Boldin). The tradeoff is that your income goes up and down with the market.

One middle ground is guardrails, often linked to the Guyton-Klinger approach. In the version commonly summarized, you set bands about 20% either side of your starting rate. If a market drop pushes your current withdrawal rate above the upper band, you cut spending by 10% (Mezzi). A matching rule lets you give yourself a raise when markets do well.

Here's what that looks like. You start with $1,000,000 and take $50,000 (5%). Your upper guardrail is 6%. If the portfolio falls below about $833,000, $50,000 is now more than 6% of it, so you cut to $45,000. Make sure the cut would come out of optional spending, not essentials. This is where step 1 pays off.

6. Do the math, then stress-test it

Divide your annual portfolio withdrawal from step 2 by your savings. Then compare that rate with your horizon, target odds and withdrawal style. If it's well above the benchmarks, you have three levers: spend less, work longer, or accept more flexibility.

A single average-return projection won't tell you much here. You need to see how your plan does across many possible market paths. That's what a Monte Carlo simulation does: it runs your plan through thousands of randomly generated market sequences, good and bad, and counts how often the money lasts.

The risk that matters most: sequence of returns

Two retirees can earn the same average return over 30 years and end up in completely different places. What matters is when the bad years come. Losses early in retirement, while you're also withdrawing, do the most damage (Kitces, Retirement Researcher).

History shows how much this matters. Over rolling historical periods, the sustainable withdrawal rate was as low as 4% for people who retired in 1966 and as high as 9.8% for those who retired in 1982 (Retirement Researcher). Same rules, different starting year, very different results.

Small changes in your rate also add up. In one hypothetical Fidelity illustration, a 6% withdrawal rate ran the money out by age 81 and a 5% rate by age 89 (Fidelity).

Don't forget health care and taxes

$172,500. That's Fidelity's estimate of what one 65-year-old retiring this year will spend on Medicare premiums, deductibles and prescriptions over retirement. It leaves out long-term care entirely. Source: Fidelity Investments, 2025 Retiree Health Care Cost Estimate, July 2025. Treat health care as its own line in your spending, not a rounding error. Monte Climb's engine charges Medicare premiums and income-based surcharges year by year instead of using a flat guess.

Taxes matter too. Withdrawal rates are pre-tax, but you live on what's left after tax (Mezzi). Withdrawing $40,000 from a traditional IRA leaves you less to spend than $40,000 from a Roth account. Size your rate to your after-tax needs.

How to review your rate in later years

Setting a rate isn't a one-time job, but don't chase the headlines either. Morningstar says retirees shouldn't reset their withdrawals to each year's new "safe" figure (Boldin). That number is a starting rate for new retirees, not a yearly target.

Instead, set review points in advance:

• Every year: check your current withdrawal against your portfolio. If you use guardrails, see whether a band has been crossed.
• After a big market move: rerun your odds, especially in the first several years, when sequence risk is highest.
• At life changes: when Social Security starts, a spouse dies, you move, or health costs change.
• Every five years or so: shorten your horizon to match your age and see whether your odds have gone up or down.

Run your own numbers

All of the research above comes back to one question: will your money last for you? You can start with three numbers: your age, what you've saved, and what you spend each month. Monte Climb runs them through 1,000 simulated futures and shows the share that stay funded. It runs in your browser, and nothing is saved until you say so.

Have a follow-up question, like "Is my spending sustainable?" or "Can I retire at 62?" Ask William, our AI planner, who shows his work. It's planning software, not advice. The result is a probability, not a promise.

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Frequently asked questions

What is a safe withdrawal rate after retirement in 2026?

Morningstar's research, published December 2025, puts the safe starting rate for 2026 retirees at 3.9%. That assumes a 30-year retirement, 30–50% in stocks, fixed inflation-adjusted withdrawals and a 90% chance of the money lasting. Flexible withdrawal methods supported starting rates of about 5.7%.

Is the 4% rule still safe?

It's close to current estimates. Morningstar's 2026 figure is 3.9%, and Bengen, who created the 4% rule, has since raised his own figure to 4.7%. Whether 4% works for you depends on how long your retirement lasts, how much your spending can flex, and what other income you have.

Why do Morningstar and Bengen give different withdrawal rates?

They answer different questions. Bengen tests what would have survived the worst periods in market history, using a broader mix of assets. Morningstar runs forward-looking simulations based on its current outlook for returns. Both are reasonable, and they simply rest on different assumptions.

Should I change my withdrawal rate every year?

Not to match each year's new published figure. Morningstar says retirees shouldn't reset withdrawals to each year's new safe rate, because that number is a starting point for new retirees. Instead, review your plan every year, after big market moves and at major life changes.

How do I calculate my withdrawal rate?

Divide what you'll take from your portfolio each year by your total savings. For example, $35,000 divided by $800,000 is about 4.3%. Subtract guaranteed income like Social Security from your spending first, because the rate only applies to what the portfolio has to cover.