Constant 5.7% Safe Withdrawal rate

[Al18]

Interesting article posted by Morningstar on February 17, 2026:

The Best Strategies for Boosting Starting Withdrawal Rates in Retirement https://www.morningstar.com/retirement/best-strategies-boosting-starting-withdrawal-rates-retirement​

The article discusses five strategies to consider if you want to spend more than the traditional 4% rule approach.

One of the strategies is a constant percentage 5.7% starting safe withdrawal rate

 

[jazz4cash]

Why not 10%?

 

[RetiredHappy]

Why not 10%?

It is like our friends.. they will have depleted their funds in about 12 years.

 

[braumeister]

Interesting, but not really new. For example, consider the Bernicke Reality Retirement Plan (optionally modeled in FIRECalc), which shows that while some of your expenses increase as you get older, others will decrease.
IMHO, it's foolish to apply across-the-board increases to all your spending categories. You should carefully consider your own lifestyle when doing your planning.
In my own case, I love to travel, and do a lot of it. That's expensive, but I realize that as I get older my travel will slow down, and if I'm lucky enough to make it into my 90s, that expense category will diminish substantially. Of course, healthcare costs will probably increase as well, but it's not likely to mean a total net increase in spending.

https://robberger.com/wp-content/uploads/2024/02/RealityRetirementPlanning.pdf

 

[USGrant1962]

The terminology they use is non-standard and confusing.

Constant 5.7% usually means calculate an amount at the start of retirement and don't adjust for inflation. FWIW, that probably has a very high chance of success (except in 30 years it is worth maybe 1/3 of what it is today). But they are talking about percentage of remaining portfolio. So 5.7% of the annual value (your spending goes up and down with markets). That is guaranteed to not run out of money, but your available WR could get pretty low in a bad downturn.

EDIT - I looked at the article again and they call it "constant percentage" which is fairly standard. OP's title mis-states the article by calling it an SWR. SWR and annual percentage are two different animals.

 

[walkinwood]

This is so predictable. When markets do well, everyone projects these rosy scenarios! And when markets do badly, it is the DEATH! of the 4% rule.

 

[big-papa]

I believe at least one person on this forum is using a fixed percentage of the remaining withdrawals - no explicit inflation adjustments like SWR does. Mathematically, it will last forever, but choose too high a percentage and it will asymptotically go to zero. Choose too low a percentage and it might not be enough to keep the lights turned on.

Most/all of these require that the future looks a lot like the past. It's actually pretty easy to concoct a withdrawal scheme that addresses some worst-case past, either as a result of a specific sequence of returns or by using the past statistics of returns. Unfortunately, the future might just have other plans...

I'm going to stick with my TIPS ladders + SS + dividends thrown off from stock and sell shares of stock only when we need to.

Cheers.

 

[Dtail]

This is so predictable. When markets do well, everyone projects these rosy scenarios! And when markets do badly, it is the DEATH! of the 4% rule.

Yes including Morningstar themselves. They have had a few articles about SWR being below 4%.
I have just started this year using a percentage of remaining portfolio concept with a floor twist. It will not be 5.7% withdrawal rate though.

 

[Dtail]

It is like our friends.. they will have depleted their funds in about 12 years.

They have no idea about this concept?

 

[RetiredHappy]

They have no idea about this concept?

Nope. Instant gratification.

 

[Koolau]

This is so predictable. When markets do well, everyone projects these rosy scenarios! And when markets do badly, it is the DEATH! of the 4% rule.

Yes, we've seen the ups and downs in the "rules" over the past 25 years (probably longer, but I wasn't paying much attention until 25 years ago).

Even Bill Bengen has updated the 4% rule to the "4.7% rule."

 

[COcheesehead]

I would literally have to throw money in the air in the town square to spend this much.

 

[Koolau]

I would literally have to throw money in the air in the town square to spend this much.

Heh, heh, let us know when you plan to take the baskets-full to the tow square.

 

[RxMan]

Heh, heh, let us know when you plan to take the baskets-full to the tow square.

If you play your cards right, record yourself, and post it online you might make your money back going viral.

 

[SnowballCamper]

See, your safe withdrawal rate can be whatever you want it to be. Just apply your own definition of "safe" and alter your assumptions about volatility in your simulation until you get the "success" you want.

 

[Steelpony]

Well I had long personal experience with my in laws and parents from 1982-2017 managing in part 2 portfolios.

I found that naturally going from the go-go years to the slow-go years spending indeed does decrease. If one spouse passes all assets only have to support one person as general costs go down.

Taxes will double after two years filing as head of household though. Health care costs (premiums for sure) go up faster over time then general inflation rates.

There’s a lot of variable personal unknown costs. Independent and assisted living along with LTC being a personal choice I suppose instead of struggling to survive after 80 alone.

So I think retirement spending “could” be U shaped because this is what I saw and had to deal with.

Anyway my solution for my wife and I was to have a set aside on reinvestment as an extra safety measure. Ours has grown from 25% to 35% of PV after 16 years.

This left us fairly free to invest and spend reasonably with the rest of our portfolio (the other 75%) at the start. We’re now live in the bottom of the U just stockpiling cash true to studies.

The set aside grew because of only spending from the other 75% up to now. So in addition to that we’re stockpiling cash mimicking the other posted study, Bernicke Reality Retirement Plan.

So I think this is closer to reality. Our backup is for any variable personal unknowns or choices that may arise.

I chose to plan from personal experience not a boiler plate study.

 

[AZsniper]

That 5.7 is without inflation adjustments...pretty soon the 4.7 withdraw rate will be more money each year.

 

[ShokWaveRider]

Why not 10%?

If (Very big if) we were to take 10% we would be way over what we realistically need. And it would put us into a ridiculous tax bracket. We also could not spend it if we tried. So rather than use a percentage we us a number that equals our needs/wants minus our guaranteed income (SS, Pension etc.). That works the best for us.

 

[ERD50]

The terminology they use is non-standard and confusing.

... But they are talking about percentage of remaining portfolio. So 5.7% of the annual value (your spending goes up and down with markets). That is guaranteed to not run out of money, but your available WR could get pretty low in a bad downturn.

EDIT - I looked at the article again and they call it "constant percentage" which is fairly standard. OP's title mis-states the article by calling it an SWR. SWR and annual percentage are two different animals.

Exactly. Eventually, that 5.7% might be on a $100 portfolio - have fun with your $5.70 this year, next year it might be 5.7% of a $94.30 portfolio!

Even so, an actual 5.7% inflation adjusted WR isn't exactly 'crazy'. FireCalc shows a success rate of 62.4%. So you would succeed more than half the time. Not good enough for most of us, but a few 'gamblers' might say "good enough!", better than 50-50 odds!

 

[audreyh1]

I use % remaining portfolio, using the Dec 31 value of my retirement portfolio to calculate my annual withdrawal with a fixed percentage rate. I did extensive modeling using FIREcalc for a 50/50 portfolio total stock market/5 year treasuries. I determined that such a portfolio was likely to last indefinitely using a 4.35% withdrawal rate, with a worst case draw down of 55% in inflation adjusted terms before recovering.

My withdrawal rate is smaller - more like 3.33%. I’m still looking at a potential drawdown of as much as 50% before recovering. So having plenty of discretionary spending is very key. These worst case drawdowns typically take 11-17 years to occur.

 

[Al18]

The linked article states to use the 5.7% constant withdrawal rate (no inflation adjustment) of the previous years ending balance. Also interesting the article does not assume any Social Security benefits.

There's also an interesting table near the end of the article, showing the median ending balance after 30 years and total spending, based on a $1M starting balance.

Spending rule	Starting safe withdrawal rate (%)	Year 30 cash flow standard deviation (%)	Lifetime spending ($mil)	Median year 30 ending value ($mil)	Total spending + ending value ($mil)
Base case	3.90	0.00	1.17	1.42	2.59
Constant percentage	5.70	35.01	1.25	0.92	2.17
Endowment	5.70	38.78	1.24	0.89	2.13
Guardrails	5.20	28.86	1.36	0.70	2.06
Probability-based guardrails	5.10	16.21	1.55	0.23	1.78
Vanguard dynamic spending	5.10	36.38	1.28	0.88	2.16

 

[TickTock]

Even so, an actual 5.7% inflation adjusted WR isn't exactly 'crazy'. FireCalc shows a success rate of 62.4%. So you would succeed more than half the time. Not good enough for most of us, but a few 'gamblers' might say "good enough!", better than 50-50 odds!

I've been thinking about that concept lately. For those who have the capability and willingness to cut discretionary spending if low returns happen, it can be a valid strategy. I'm thinking of, say 2% WR in core spending and 3.7% in discretionary/luxury.

This is an alternate option for the strategy of having core spending covered by SS/pension/annuities/bond ladder and discretionary/luxury spending from the portfolio - which could then be 100% equities.

That said, with the current high equity valuations I think it more likely that a strong downward equity correction is coming. So I'd tend more towards the core spending covered strategy. If valuations were low, I'd lean the other way.

 

[dobig]

Just a thought. I think you could pretty easily model a pretty safe portfolio to get 5.7% in dividends between dividend growth etfs, cefs, bond funds and covered call income funds. Our taxable portfolio which will be our main source of income in retirement gets 4% and it wouldn't take many adjusments to get it to 5.7%. Worst case is a 2008 scenario where S&P 500 dividends fell 23% peak to trough and took 22 months to recover. Almost all other bear markets/recessions dividends stay flat.

 

[Dtail]

I use % remaining portfolio, using the Dec 31 value of my retirement portfolio to calculate my annual withdrawal with a fixed percentage rate. I did extensive modeling using FIREcalc for a 50/50 portfolio total stock market/5 year treasuries. I determined that such a portfolio was likely to last indefinitely using a 4.35% withdrawal rate, with a worst case draw down of 55% in inflation adjusted terms before recovering.

My withdrawal rate is smaller - more like 3.33%. I’m still looking at a potential drawdown of as much as 50% before recovering. So having plenty of discretionary spending is very key. These worst case drawdowns typically take 11-17 years to occur.

As I stated in other posts, I have just started using the Clyatt 95/5 withdrawal strategy. This strategy as you know, is a cousin of your strategy.
In your opinion with your best guess based on researching your strategy, would you think the withdrawal rate would be higher or lower than 4.35% for the Clyatt strategy?
I realize you haven't modeled the Clyatt strategy, but was just wondering.

 

[audreyh1]

As I stated in other posts, I have just started using the Clyatt 95/5 withdrawal strategy. This strategy as you know, is a cousin of your strategy.
In your opinion with your best guess based on researching your strategy, would you think the withdrawal rate would be higher or lower than 4.35% for the Clyatt strategy?
I realize you haven't modeled the Clyatt strategy, but was just wondering.

I have looked at the Clyatt strategy for some of the worst case historical scenarios as a comparison and I can tell you that they are very close in terms of drawdown and recovery. Clyatt may lag but just by a tiny bit. Overall I don’t think there is enough difference to matter. I’m not sure about the 4.35% as a sustainable withdrawal rate. Also, I only modeled 50% total stock market and 50% 5-year treasuries. If you are using a different AA that will have an impact.