Is a 5%, 6%, 7% or 8% withdrawal rate safe?

The short answer

Historically, rates above 4% held up only some of the time with fixed spending. Taking a set share of $1 million in year one and raising it with inflation every year, a 60% stock / 40% bond mix lasted 30 years in 65 of 69 start years since 1928 at 4%, 50 at 5%, 36 at 6%, 29 at 7% and 14 at 8%. The higher the rate, the earlier the failures came: at 4% the earliest ran out in year 26; at 8%, in year 10. With 100% stocks, 5% to 8% lasted more often (54, 47, 41, 31 of 69) but failed sooner in the worst starts.

Every rate up to 3.5% lasted in all 69 starts with 60% stocks. Test your own rate →

Every rate from 3% to 8%, tested over 30 years

$1 million, the rate times $1 million in year one, then the same amount raised with inflation every year. S&P 500 stocks and 10-year Treasuries, rebalanced yearly, no taxes or fees. “Median year ran out” is among the starts that fell short.

How long each rate lasted when it fell short

At 7% with 60% stocks, the 40 starts that ran out lasted a median of 19 years, and 13 were empty within 15. The hardest starts were the same at every rate: retirements that began in the mid-to-late 1960s, just before a decade of high inflation. See the worst year to retire and what happened to 1966 retirees.

Is 5% safe?

Not with fixed spending, historically. At 5%, 60% stocks lasted in 50 of 69 start years, and 54 with all stocks. The failures ran out between years 18 and 30, mostly in retirements that began from the mid-1950s to the early 1970s, plus the Depression years.

Flexibility changes the picture. With guardrails that trim spending after big drops, 5% lasted in 62 of 69 with 60% stocks. The price: in 31 of those 62 starts, spending fell to the floor of $40,000 for at least a year. For a real 5% plan with Social Security, see $2 million at $100,000 a year, or test 5% with your own savings.

6% and 7%: about half of starts or fewer

At 6%, 36 of 69 starts lasted with 60% stocks and 47 with all stocks. At 7%, 29 and 41. Failures also came much sooner: at 6% the earliest ran out in year 14, and 17 of the 33 failures came within 20 years. A 6% or 7% plan has needed flexibility, or other income covering much of the spending, to be dependable. Test 6% with your own savings.

The 8% claim, tested

Some widely shared advice says a retiree invested entirely in stock funds can withdraw 8% a year: if stocks average about 12%, taking 8% leaves about 4% to cover inflation raises. We tested that on its own terms: 100% S&P 500 stocks, 8% of starting savings, raised with inflation every year.

It lasted 30 years in 31 of 69 start years. Of the 38 that ran out, 19 did so within 15 years, the earliest in year 9. Every start from 1955 through 1974 ran out. A retiree who started in 2000 ran out in year 10. With 60% stocks, 8% lasted in 14 of 69.

Why doesn’t a 12% average support 8%? In our data the S&P 500’s simple average return since 1928 is 11.85%, close to that figure. But money grows at the compound rate, which was 10.02%, and inflation compounded at 3.04%, leaving about 6.78% a year after inflation. Even that is an average across very different decades: withdrawals taken during early losses do lasting damage. See the returns by year. 8% has lasted for some start years, mainly retirements that began in the early 1930s, from 1942 to 1954, or from the mid-1970s through the 1980s, but not for most.

What withdrawal rate lasts forever?

“Forever” here means ending 30 years with at least the starting savings in today’s dollars, so the next 30 years would start no worse off. By that test, about 2.43% kept its savings intact in every start since 1928 with 60% stocks, and about 2.90% with all stocks.

The answer depends on the horizon: measured over 40 years instead of 30, the every-start figure is higher, because late-1960s starts had time to recover in the 1980s and 1990s.

Over 40 years

For an early retirement, the bar is higher. There are 59 complete 40-year periods in our data, starting 1928 to 1986.

For other lengths and stock mixes, use the safe withdrawal rate calculator, or see retiring at 55.

What flexibility changes at each rate

With guardrails (trim spending about 10% after big drops, raise it after strong years, never below 80% of the starting amount), every rate lasted more often. But the floor means a high rate still behaves like a fixed plan once spending hits it:

Guardrails moved 5% from 50 to 62 lasting starts, but 8% only from 14 to 24. Compare the approaches in the 4% rule vs guardrails. In the planner, guardrails built from your own savings and Social Security, plus a yearly check-in, are part of Plus ($69 a year).

Reading these numbers

These are counts of past start years, not odds of the future, and consecutive starts share most of their history. Other sites publish different percentages for the same rates because they use different stock mixes, periods, fees and definitions of success; see why other tools show different numbers. For what a success count means and how much margin is worth paying for, see what success rate is worth aiming for and how historical testing works.

Test your own rate

See how any rate does with your own savings and stock mix in the 4% rule calculator:

Test 5% Test 6% Test 7% Test 8%

Or see your plan’s projection and odds, with your Social Security, in the free retirement planner.

How these figures are calculated

• $1,000,000 of savings. The rate times $1 million is withdrawn in year one, then the same amount raised with inflation every year and never cut. Withdrawals come out at the start of each year.
• Stocks are the S&P 500 with dividends reinvested; the rest is 10-year Treasuries, rebalanced yearly. No taxes, fees or other income. A start “lasted” if every year’s withdrawal was paid in full; “ran out in year N” is the first year it couldn’t be.
• 30-year results use all 69 complete periods from 1928 to 1996; 40-year results use 59. Fixed spending follows William Bengen’s 1994 approach; guardrails use the planner’s default rules, based on Guyton and Klinger (2006).
• Data: stock, bond and inflation returns since 1928, from Aswath Damodaran (NYU Stern) and the U.S. Bureau of Labor Statistics. Results are hypothetical, based on U.S. history; not a prediction or financial advice. See the full methodology.