Is the 4% Rule Still Safe? Bengen Now Says 4.7%, Morningstar Says 3.9%

Your FIRE number is the amount of invested money that can cover your spending for the rest of your life, and the shortcut is your annual expenses times 25. That is the same as planning to live on 4 percent of your savings each year. The harder questions are what withdrawal rate is actually safe, and how fast you can get there.

Here is the tension that defines the topic right now. The man who invented the 4 percent rule, William Bengen, raised his own number to 4.7 percent in his 2025 book, while Morningstar’s late-2025 research says retirees starting now should withdraw just 3.9 percent. On a $1,000,000 portfolio that gap is $47,000 versus $39,000 of first-year spending. Both are credible. They simply ask different questions.

What is my FIRE number, and how do I calculate it?

Your FIRE number is your annual spending divided by your withdrawal rate. At a 4 percent rate that is spending times 25, because 1 divided by 0.04 is 25. If you spend $50,000 a year, your number is $1,250,000. The figure is built on what you spend, not what you earn, which is why two people with very different incomes can need the same amount.

The withdrawal rate you assume changes the target a lot. The table shows the same $50,000 of annual spending under the three rates in today’s debate.

A lower assumed rate means a bigger target and more safety. A higher rate means a smaller target and more risk. The FIRE calculator works your number in today’s dollars and shows how many years of saving stand between you and it.

Is the 4% rule still safe in 2026?

It is a useful anchor, not a guarantee, and it is being revised in both directions. The rule came from William Bengen’s 1994 study, which found that a retiree drawing about 4 percent of a balanced portfolio, adjusted for inflation, would have survived every 30-year window in the historical record, including the worst case. The 1998 Trinity Study reached a similar conclusion using a high success rate rather than a strict worst case.

The two 2025 updates pull apart because they use different methods. Bengen’s book raised his benchmark to 4.7 percent by widening the portfolio to include small-cap, mid-cap, and international stocks, which lifts the historical worst case. Morningstar’s research is forward looking, running Monte Carlo simulations on current valuations and bond yields, and it lands at 3.9 percent for a 30-year retirement at a 90 percent success rate. One asks what survived the past; the other asks what is likely to survive the future. Hold both in mind rather than picking a winner.

Should I use a lower rate if I retire in my 40s?

Probably, because a longer retirement is more exposed to bad timing. The 4 percent rule was modeled on 30 years. Retire at 45 and you may need the money to last 50 years, which raises the odds that a poor stretch of early returns does lasting damage. Many in the FIRE community use a starting rate of 3.25 to 3.5 percent for that reason.

The technical name is sequence-of-returns risk, and it is the real reason for caution. A bad decade at the start of retirement, while your balance is largest and you are selling to fund spending, is far more damaging than the same decade later. Researcher Wade Pfau has shown that the first ten years of returns can explain about 77 percent of a retirement’s final outcome. A 20 percent drop on a $1,000,000 portfolio costs $200,000; the same percentage drop years later, on a smaller balance, costs far less. Tactics like a bond tent, a cash cushion, or flexible spending exist to soften those first years.

Why does my savings rate matter more than my income?

Because your savings rate sets your timeline twice over: a higher rate means you save more each year and need less to live on later. That second effect is the one people miss. Cutting your spending lowers your FIRE number at the same time it raises what you put away, so the finish line moves toward you while you sprint at it.

The math is striking when you start from zero, assume a 5 percent real return, and plan to withdraw 4 percent. The chart and table below show years to financial independence by savings rate, and the result is nearly independent of income, because both your savings and your target scale with what you earn.

This is the framework Mr. Money Mustache made famous in The Shockingly Simple Math Behind Early Retirement, and the engine behind it is compound growth. If that part feels fuzzy, the compound interest playbook shows why the early, high-savings years do the heavy lifting. A worked case: at 35 with $50,000 already invested, a $100,000 income, and $50,000 of spending (a 50 percent savings rate), the same model reaches $1,250,000 in about 16 years, at age 51.

Lean, Coast, Barista, Fat: what is the difference?

These are not personalities you choose; they are situations your numbers put you in. They differ on two axes: how big a portfolio you need, and how much you still have to work. The table sorts them out.

Coast FIRE is the one worth checking early, because it is a real milestone you can hit decades before full independence. Once your invested balance is large enough to grow into your target on its own, every dollar you earn after that is for living now, not for retirement. The Coast FIRE calculator will tell you whether your current savings already coast to your number, and Coast FIRE: when you can stop saving walks the math in full.

How do early retirees handle health insurance and early withdrawals?

Two problems sit between an early retiree and age 65: health insurance, and reaching retirement accounts without a penalty. Both are solvable, and both reward keeping your taxable income low and deliberate. This is education, not personalized tax advice, so confirm specifics with a professional.

For health coverage before Medicare at 65, most early retirees use the ACA marketplace, where premium tax credits shrink as income rises. As of mid-2026, the enhanced premium tax credits expired at the end of 2025, restoring the 400 percent of poverty subsidy cliff, so a single dollar of extra income can cost thousands in lost credits. That makes managing reported income through Roth conversions and capital-gains timing central to an early-retirement plan.

For the accounts, two tools open the door before 59 and a half. A Roth conversion ladder moves money from a traditional account into a Roth, then withdraws each converted amount tax and penalty free five years later, so a five-year taxable bridge keeps you fed while the ladder fills. A 72(t) plan, known as substantially equal periodic payments, lets you draw a fixed amount from an IRA early without the 10 percent penalty. The IRS Roth distribution ordering rules are what make the ladder work, since contributions and conversions come out before earnings. The number that ties it all together is still your FIRE number, so start there and build the bridges around it.