Safe Withdrawal Rate: The 4% Rule Across 17 Countries

Key takeaways

• Wade Pfau ran the 4% rule across 17 developed countries over 1900-2008. The worst-case sustainable rate cleared 4% in only four: Canada 4.42%, Sweden 4.23%, Denmark 4.08%, the United States 4.02%. Japan's was 0.47%.
• Fix the portfolio at 50/50 instead of letting the retiree pick the best allocation with hindsight, and a 4% inflation-adjusted withdrawal was not safe in any of the 17 countries; Canada came closest at 3.94%.
• Bengen's 1994 paper never said a portfolio would last forever at 4%. It said no historical case exhausted a 50/50 portfolio before 33 years, and that 4.25% could exhaust one in 28.
• Bengen's own 2025 revision, using 400 quarterly retirement dates from 1926 to 2024 and seven asset classes, raises the worst-case figure to 4.7% - and puts the average across all those start dates at 7.0%.
• None of the headline studies charges fees or taxes. Pfau shows 1.6% stock and 1.2% bond fees cut one SAFEMAX from 4.15% to 3.49%; Morningstar's 2025 base case falls from 3.9% to 3.4%.

Would your 4% rule have worked in Japan?

Picture two people stopping work with the same savings and the same plan. Each takes 4% in year one, raises it with inflation after that, and holds shares and bonds. One lives in the United States. The other lives in Japan.

The American's plan holds. Even starting in the worst year of the whole US record, 4.02% survived 30 years. The Japanese retiree's equivalent worst case is 0.47%.

Same rule. Same discipline. Same arithmetic. A factor of nine between them, and the only difference was which country's century they lived in.

So is 4% a law, or is it one country's unusually good hundred years written up as a law? That's the question here.

Work the first part through in your own money. A 4% start means your pot is 25 times what you plan to spend in year one. At Japan's 0.47%, funding that same first year needs a pot more than eight times larger. Nothing about the retiree changed.

What Bengen's 1994 paper actually concluded

William Bengen's Determining Withdrawal Rates Using Historical Data ran a portfolio of 50% common stocks and 50% intermediate-term Treasuries through the Ibbotson Stocks, Bonds, Bills and Inflation series, starting a new hypothetical retirement in each year from 1926 onward. He measured what he called portfolio longevity - how many years the money lasted before it was gone.

His numbers were these. At a 3% initial withdrawal, every retiree in the sample got at least 50 years, which was as far as he plotted; the same held up to about 3.5%. At 4%, "in no past case has it caused a portfolio to be exhausted before 33 years, and in most cases it will lead to portfolio lives of 50 years or longer." At 4.25%, a first-year withdrawal "could exhaust a portfolio in as little as 28 years." At 5%, retirees starting in the late 1960s and early 1970s "might have had only 20 years of funds available." At 6%, 31 scenario years ran out of money against 20 that didn't - "less than a 40-percent chance to successfully negotiate retirement."

Notice what he was actually solving for. 4% was chosen against a 30-year minimum, not a lifetime guarantee, and it was the floor of the historical distribution rather than a central estimate. And his other conclusion has been almost entirely forgotten: he found stock allocations below 50% counterproductive, and advised "a stock allocation as close to 75 percent as possible." If your questionnaire put you in something more cautious, you're not following Bengen's rule. You're following its headline.

He also stated his tax assumption plainly - "we are assuming that all retirement assets are held in tax-deferred accounts" - and the paper models no management fees at all.

The Trinity study measured something different, and that's the number you've heard

Four years later, Philip Cooley, Carl Hubbard and Daniel Walz at Trinity University published Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable in the AAII Journal. They used 1926-1995 data, the S&P 500 for stocks and long-term high-grade corporate bonds for bonds, and reported the share of historical periods a given rate survived.

Their inflation-adjusted table, for a 30-year payout, gives a 4% withdrawal rate a 95% success rate on a 50/50 portfolio, 98% on 75/25, 95% on all-stocks, 71% on 25/75 and 20% on all-bonds. Those are the numbers behind "the 4% rule works 95% of the time." The same source carries 15, 20 and 25-year payouts too, transcribed in full in our table of withdrawal rate success rates by horizon and allocation.

How thin is that estimate? Thinner than you'd guess. Pfau dissected the authors' 2011 update, which extended the data to 2009. The 96% success rate for an inflation-adjusted 4% withdrawal from a 50/50 portfolio comes from 55 possible retirement start years, of which exactly two failed - 1965 and 1966. Fifty-three out of 55: that's 96.4%. A headline probability you'll see everywhere rests on two observations.

The Trinity authors were explicit about what they excluded: "The study did not adjust for taxes or transaction costs."

International withdrawal rates: Pfau ran the rule in 17 countries, 13 failed

The obvious correction is to run the rule somewhere else. Pfau's 2010 paper in the Journal of Financial Planning, An International Perspective on Safe Withdrawal Rates: The Demise of the 4 Percent Rule?, did exactly that. It used the Dimson-Marsh-Staunton dataset of stocks, bonds, bills and inflation for 17 developed markets across the 109 years from 1900 to 2008. With a 30-year retirement and data ending in 2008, retirements start between 1900 and 1979 - 80 start dates per country, 1,360 retirement episodes in total. None of those rules bind in law, whereas required minimum distributions do, at 3.77% of the balance from age 73.

He then handed each retiree an advantage no real person has. In every country and every start year, the model picks the fixed allocation across that country's stocks, bonds and bills - one of 5,151 combinations - that would have produced the highest sustainable withdrawal rate over the following 30 years. Perfect hindsight, deliberately, so nobody could accuse the study of rigging the allocation to make 4% fail. No fees are charged and no tax is collected.

The measure is Bengen's SAFEMAX: the highest inflation-adjusted withdrawal rate that survived the worst retirement start year in that country's record. The chart above plots all 17.

Find the row you'd have been born into. Four countries out of 17 cleared 4%, and the United States ranked fourth of the four. Six came in under 3%. The spread between the top of the table and the bottom is that factor of nine.

The most important line in the paper is the one that removes the hindsight. Pfau fixed the allocation at 50% stocks and 50% bonds - the split Bengen and the Trinity authors both used. On the SAFEMAX test, a 4% withdrawal rate wasn't safe in any of the 17 countries. Canada's fell to 3.94%, with the United States and Denmark tied at 3.66%. Pfau's own summary: "who but the wealthiest could possibly save enough to live comfortably from the global SAFEMAX withdrawal rate of 0.47 percent?"

The US number is high because the American century was unusually good

Pfau's summary statistics explain the ranking. On DMS data from 1900 to 2008, US real equity returns compounded at 6.01% a year. Only three of the other 16 countries beat that - Australia at 7.26%, Sweden at 7.23%, South Africa at 7.07%. Only four had lower equity volatility than the US figure of 20.43%. Australia is the only country in the set with both a higher return and a lower standard deviation. On the bond side, only three countries beat the US real return of 2.12%, and only two countries had lower average inflation than the American 2.98%.

Dimson, Marsh and Staunton made the wider point in 2004, and Pfau quotes it. US stock market capitalisation grew from about 22% of the world total in 1900 to 54% in 2003, an outcome that "would have been difficult to predict in 1900 and cannot be extrapolated into the future." Over 1900-2002 the US real compounded equity return was 6.3% against 5.4% for their developed-country index. So choosing US data to write your retirement rules is itself a choice made after seeing which market won.

A newer study reaches the same place differently. Anarkulova, Cederburg, O'Doherty and Sias, publishing in the Journal of Pension Economics and Finance in 2025, built a dataset of asset-class returns across 38 developed countries. They simulated a 65-year-old couple facing both market risk and mortality risk. Their finding: a couple willing to accept a 5% chance of running out of money could withdraw 2.31% a year. That's a different question from Bengen's - it prices how long you live, not just how markets behave - but it points the same way.

The case against the critics is stronger than the critics usually allow

A piece that stopped there would be as lazy as one treating 4% as a law. Four objections deserve their weight.

4% was always a worst case, and worst cases are rare. This is the big one. Bengen's own updated research, set out in his 2025 book A Richer Retirement and summarised in an AAII interview, ran 400 quarterly retirement start dates from January 1926 to the end of 2024 across seven asset classes - adding US micro-cap, mid-cap and international stocks and Treasury bills to his original mix. The worst-case rate rises to 4.7%, and the worst start date is October 1968. But the average SAFEMAX across all 400 start dates is 7.0%, and Bengen reckons a retiree buying in at the April 2009 market bottom could have supported 8.0%. So a retiree taking 4% was, in the typical historical case, spending a little over half of what the market would have carried. Which error would you rather make?

Morningstar's 2025 research puts the same distribution on US history. For rolling 30-year windows starting between 1927 and mid-1995, the starting safe rate on a 50/50 portfolio ranged from 3.9% for the late-1968 retiree to 10.5% for the mid-1982 retiree. On an all-equity portfolio the range is wider still - 3.4% for the unlucky 1929 retiree, 18% for the July 1932 one.

The international worst cases are mostly wars. Look again at the failure years in the table: Germany 1914, Belgium 1911, France 1943, Italy 1944, Japan 1940. Pfau concedes the point himself - "some of the worst outcomes were connected with World Wars I and II, and we can hope that such devastating wars will never happen again." Strip the two world wars out and the international spread narrows toward the 3.3%-4.4% band occupied by the top nine countries.

The method has a bias of its own. Pfau's countries hold only their own domestic assets. Imagine that 1911 Belgian retiree holding a globally diversified portfolio instead - a different experiment, and a better-behaved one. Pfau has also shown that rolling historical simulations over-weight the middle of the sample. In a 30-year study of 1926-2009, each year from 1955 to 1980 appears in 30 of the simulated retirements while 2009 appears in one. Real bond returns over 1955-1980 averaged -1.4% against 5.2% for the rest of the period. The method quietly loads the dice against bonds. The domestic-only design matters, because international diversification raised risk-adjusted returns in the vast majority of countries over the past 50 years.

Nobody spends like this. The 4% rule finances a rigid, inflation-linked spending plan out of a volatile portfolio. Would you really keep raising your spending through a crash because a spreadsheet said so? Scott, Sharpe and Watson priced that mismatch. A typical rule allocates 10%-20% of a retiree's initial wealth to surpluses that are never spent, plus another 2%-4% to overpayments for the spending pattern it buys. Real retirees cut back after a crash, which changes your arithmetic substantially.

Every headline number here is before fees and before tax

This is the least discussed gap, and the one that reaches your bank account. Bengen assumed tax-deferred accounts and modelled no fund charges. Trinity "did not adjust for taxes or transaction costs." Pfau charges nothing, noting his figures suit "withdrawals from a Roth IRA" and must otherwise be read as pre-tax. Morningstar states that its research "doesn't incorporate the impact of expenses or taxes." Which account the money comes out of decides how much of that gap bites, and the withdrawal order that minimises it is not the same for every retiree.

Both Pfau and Morningstar quantify the omission. Pfau takes Bengen's 4.15% SAFEMAX for a 50% large-cap and 50% intermediate-government-bond portfolio, then applies mutual fund charges of 1.6% on stocks and 1.2% on bonds. The SAFEMAX falls by 0.66 percentage points to 3.49%. Morningstar assumes 1% in annual expenses on a 60/40 portfolio drawn from a tax-deferred account, and its 3.9% base case drops to 3.4%.

Follow Pfau's haircut into your own budget. Same pot, same portfolio, same rule, and 0.66 points less to live on - roughly a sixth of your income, every year, for as long as the plan runs. Nothing about markets caused it.

Now put it next to the country table. The gap between the United States at 4.02% and the Netherlands at 3.36% is 0.66 percentage points - exactly the size of Pfau's fee haircut. For the nine countries at the top of the table, what you paid in charges mattered about as much as which country you retired in. The long-run cost of active management isn't a separate topic from this one.

Where the current safe withdrawal rate estimates sit

Morningstar's State of Retirement Income: 2025, published on 3 December 2025, is the closest thing to an annually refreshed number. Its base case is a 3.9% starting rate for a new retiree seeking level inflation-adjusted spending over 30 years, at a 90% probability of finishing with money left. That isn't a backtest: it comes from 1,000 Monte Carlo paths built on forward-looking return and inflation assumptions, with expected inflation of 2.46%. Before retirement the same expected return is what decides mortgage overpayment vs investing, once the mortgage rate is grossed up for tax.

Its recent history reads 3.3% in 2021, 3.8% in 2022, 4.0% in 2023, 3.7% in 2024 and 3.9% in 2025 - a number that moves with valuations and yields, not a constant. The highest rate in the 2025 model came from portfolios holding between 30% and 50% in equities, a long way from Bengen's 75%. Two things explain that: Morningstar forecasts rather than backtests, and today's bond yields do more work than they did in the samples Bengen and Trinity used. A 30-year TIPS ladder priced on 30 September 2025 supported 4.5%. Flexible rules in the same report reach 5.7%, but that's a different mechanism - the 5.7% belongs to Morningstar's constant-percentage and endowment methods, which reset your spending off the portfolio balance each year. Its Guyton-Klinger guardrails row starts at 5.2%. Both sit in the same Exhibit 15, and our piece on what flexible withdrawal rules cost in spending volatility works through the trade.

What this evidence cannot tell you

All of it is backtesting, or simulation built on backtests. Pfau's 1,360 retirement episodes come from 17 country histories, and the 30-year windows overlap heavily, so they're nowhere near 1,360 independent observations. Trinity's 30-year table rests on 41 overlapping windows drawn from 70 years of one country's data.

Sequence risk is why the average case isn't your planning case. Two portfolios can earn the same average return over 30 years and end in completely different places depending on when the bad years land. A withdrawal taken during a crash sells more shares to raise the same income. That's why the 1968 and 1969 retirees anchor almost every one of these studies while the 1982 retiree could have taken 10.5%.

The 30-year horizon is a convention, not a fact about you. Pfau's perfect-foresight assumption inflates his SAFEMAX figures relative to anything achievable; his 50/50 results, which don't use it, are the more realistic comparison. His returns are domestic-currency, domestic-asset returns, so they don't describe an investor who held foreign equities alongside domestic ones. And Morningstar's 3.9% inherits the accuracy of Morningstar's own capital markets assumptions, which are a forecast like anyone else's.

What would change the conclusion

If US asset returns mean-revert toward the international average. That's the scenario Pfau wrote the paper to illustrate. His US SAFEMAX of 4.02% sits at the top of the international distribution because US returns did. A US century that looked like the international median would produce a SAFEMAX in the low threes.

If the war-driven failures are treated as unrepeatable. Drop Germany, France, Italy, Belgium and Japan and the 12 countries that remain run from 2.56% in Spain to 4.42% in Canada. That's still a wide spread, and eight of the 12 sit below 4%. But that's an argument about a point or so of withdrawal rate, not about whether the rule collapses.

If spending is allowed to flex. Suppose you trim your spending after a crash, as most retirees do. Every number above assumes the opposite - that you keep withdrawing the same real amount through a 50% market decline. Relax that and the safe rate rises materially in every study that has tested it.

If the horizon isn't 30 years. A 30-year rule tells you almost nothing about a 45-year retirement, and Bengen's charts show the damage from a bad start reaching back 20 years or more.

So the thing worth watching isn't the headline percentage. It's the two inputs underneath it: what your portfolio actually costs you each year, and how far your current withdrawals sit from the rate you planned on. Both are things a tracker such as LedgerTouch can show you continuously. Neither is something the research can settle on your behalf.