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In this installment of the Portus Perspectives series, William takes a deep dive into one of the most foundational concepts in retirement planning. The 4% withdrawal rule. Where it came from, what it actually means, and why it is a great starting point that should never be the end of the conversation.
The story starts in the early 1990s with a financial planner named William Bengen, who set out to answer a deceptively simple question. If you retire at 60 and live to 90, what is the highest amount you can withdraw from a portfolio every year without ever running out of money?
He went back to 1929, ran rolling monthly averages across every historical market cycle, and landed on a number. Roughly 4.15%.
That number's been debated, refined, and built upon ever since.
Some argue for guardrails that reduce spending during recessions. Others point to today's market valuations and suggest the sustainable rate might be slightly lower. The range generally hovers somewhere between 3.5% and 5% depending on who you ask and what assumptions you use.
William uses it as a quick mental check in client conversations.
A two million dollar portfolio times four percent equals eighty thousand dollars a year. Add Social Security and you start to get a picture of whether someone is in the ballpark of where they need to be. Fast, simple, and genuinely useful as a first pass.
But here's where the real planning begins. Life doesn't increase by inflation every year in a straight line. A client William worked with years ago wanted to take one once in a lifetime trip every year from age 60 to 70 while they were healthy and mobile, then pull back after that. Thirty to forty thousand dollars a year for a decade, then a step down. That is not a four percent inflation adjusted line. That is a plan. And modeling it out, running Monte Carlo analysis, and revisiting it every single year is what turns a rule of thumb into a retirement that actually works.
Key Topics Covered:
- The Origin of the 4% Rule: Who William Bengen was and how he arrived at 4.15% in the early 1990s.
- How to Use It as a Quick Check: Multiplying your portfolio by four percent to see if you are in range.
- Why It Is a Starting Point Not a Finish Line: The real expenses of retirement rarely follow a straight inflation adjusted line.
- The Once in a Lifetime Trip Example: How modeling specific spending patterns changes the picture entirely.
- Monte Carlo Analysis: Why running scenarios is more useful than relying on a single number.
- Revisiting Every Year: Why the plan you build today needs to be updated as life changes.
If you've ever wondered how much you can safely spend in retirement or whether your portfolio is large enough to support the life you want, this episode gives you the framework to start answering that question.
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ORIGINAL MEDIA SOURCE(S): William Bissett: How Much Can You Safely Spend in Retirement? The 4% Rule Explained | Portus Perspectives
Originally Recorded on September 2, 2026
Portus Perspectives: Episode 47
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