According to the Morningstar State of Retirement Income report for 2026, the safe starting withdrawal rate for a 30-year retirement is 3.9%. This rate assumes a 90% probability of success for a portfolio with 50% stocks and 50% bonds.
The recently published State of Retirement Income report concluded that the starting safe withdrawal rate for people beginning their retirement in 2026 is 3.9%.
The 7 percent rule for retirement suggests retirees withdraw 7 percent of their portfolio in the first year and adjust annually for inflation. While it provides higher income early on, it is not considered a sustainable income strategy for most retirees due to higher risk and longer life expectancy.
Morningstar's 2025 “State of Retirement Income” research recommends a starting safe withdrawal rate of 3.9% for those looking for a steady level of inflation-adjusted spending each year, up from 3.7% last year.
Withdrawal rates considered safe or sustainable vary from 3 percent to more than 6 percent, while optimal asset alloca- tions range from 50 percent to 100 percent stock.
Only a small fraction of Americans, around 3% to 4.7%, actually retire with $1 million or more in retirement accounts, according to Federal Reserve data, despite many feeling they need that much for comfort. The median savings for those approaching retirement (ages 65-74) is much lower, around $200,000-$609,000, making the million-dollar milestone rare, though "401(k) millionaires" are growing in number.
In the past few years, the internet has been abuzz in the financial planning community regarding financial wellness and planning guru Dave Ramsey's vaunted 8% proposed withdrawal rate.
Delaying Social Security until 70 can yield a larger benefit amount, and some retirees may have pension income they can count on as well. While conservative models place a safe withdrawal rate for older retirees between 4.5% and 5%, Bengen suggests that you could potentially withdraw up to 5.5% without increasing risk.
The top ten financial mistakes most people make after retirement are:
Yes, you can live off the interest/returns from $500,000, but it depends heavily on your lifestyle and expenses, with the common 4% rule suggesting about $20,000 annually, which may require a frugal lifestyle, relocation, or significant Social Security income to supplement. With smart investing (e.g., balanced stock/bond mix) and minimal spending, it's feasible for many, but living in a high-cost area or with high expenses would make it difficult.
The Social Security increase for 2026 is a 2.8% Cost-of-Living Adjustment (COLA), announced by the Social Security Administration, raising average monthly benefits by about $56 for retirees and affecting nearly 71 million Americans starting in January 2026, with SSI payments beginning in late December 2025. This adjustment helps payments keep pace with inflation, though Medicare Part B premiums also increased for 2026, which is typically deducted from Social Security checks.
How long does $1 million last after 60? If you withdraw 4% annually, it may last 25–30 years. Living off interest only, you might get $40,000–$50,000 per year indefinitely, depending on rates.
The 4 Percent Rule
Based on this rule, withdrawing 4 percent from $750,000 would give you $30,000 per year. If your living expenses are close to or below that amount, and you have other sources of income like Social Security or a pension, your savings could last through a typical retirement.
The "7 withdrawal rule" in retirement planning suggests taking out 7% of your savings in the first year, then adjusting for inflation annually, offering more income early but with higher risk than the traditional 4% rule, being potentially better for shorter retirements or risk-tolerant individuals who want more spending power upfront, though it's less sustainable long-term for a standard 30-year retirement. It's a guideline, not a guarantee, and its success depends heavily on market performance, individual health, and lifestyle, with some financial experts recommending more conservative rates or adjusting based on personal needs.
A common starting point is to estimate that you'll need about 70% to 80% of your pre-retirement income to maintain your standard of living in retirement. For example, if you earn $150,000 annually while working, you might need between $105,000 to $120,000 as a starting point in retirement.