The 4% rule still works as a starting point in 2026, and the bond side of the equation is stronger than it has been for most of the past 15 years. As of July 21, 2026 the 10-year Treasury yields 4.50% and the 10-year inflation-protected Treasury (TIPS) yields 2.37% above inflation, according to the U.S. Treasury [3][4]. A ladder of TIPS at that real yield can fund an inflation-adjusted withdrawal of about 4.7% of the starting balance for 30 years with no help from stocks. The weak point is equities: Vanguard's June 30, 2026 forecast puts U.S. stock returns at just 4.2% to 6.2% a year over the next decade [5]. This article revisits the rule with those numbers.
What the 4% rule actually says
William Bengen's 1994 study in the Journal of Financial Planning tested portfolios of 50% stocks and 50% intermediate Treasuries against every retirement start year since 1926, with withdrawals rising each year for inflation [1]. At a 3% initial withdrawal every start year lasted at least 50 years. At 4% no start year ran out in less than about 35 years. At 5%, retirees who started in the late 1960s and early 1970s had only about 20 years of funds [1]. The rule is therefore a worst-case historical floor, not an average: most start years at 4% left money behind.
Fidelity's May 26, 2026 guidance reaches a similar place. It suggests withdrawing no more than 4% to 5% in the first year, then adjusting for inflation, and cites historical success rates at 90% confidence of 5.0% for a 25-year retirement, 4.6% for 30 years and 4.4% for 35 years with a 50% stock, 40% bond, 10% cash mix [2]. A conservative 20/50/30 mix supports 4.2% over 25 years, and a growth 70/25/5 mix supports 4.5% [2].
Bond yields in 2026 make the rule easier, not harder
The rule failed in the historical record when high inflation coincided with poor returns, which is why the 1966 to 1974 cohorts define the floor. Bonds that yield more than inflation reduce that risk. The table shows Treasury yields on July 21, 2026 [3][4].
| Maturity | Nominal yield | TIPS real yield |
|---|---|---|
| 3-month bill | 3.87% | n/a |
| 2-year | 4.26% | n/a |
| 5-year | 4.37% | 2.09% |
| 10-year | 4.50% | 2.37% |
| 30-year | 5.14% | 2.91% |
A real yield is a promise to beat inflation by that margin, whatever inflation turns out to be. The arithmetic of a 30-year ladder is a level real annuity: at a 2.4% real yield the payment that exhausts the principal in exactly 30 years is 4.71% of the starting amount, and at 2.9% it is 5.04%. A retiree who bought only TIPS in July 2026 could therefore fund a withdrawal above 4% for three decades with no equity risk, although nothing would be left at the end. In 2021, when TIPS real yields were negative, the same ladder supported less than 3.3%.
Inflation is still the variable to watch
The consumer price index rose 3.4% in the 12 months to June 2026, based on the CPI series on DataPorium's economic metrics page [6]. A 4% withdrawal indexed to that pace grows 40% in nominal terms over 10 years. Nominal bonds at 4.50% cover that only while inflation stays near 2% to 3%; TIPS cover it by construction. That is the practical reason many retirement researchers now pair the rule with an inflation-linked bond allocation.
Stock valuations are the reason for caution
Bengen's data included a 10.3% compound return on common stocks from 1926 to 1992 [1]. Vanguard's Capital Markets Model, updated with data as of June 30, 2026, projects only 4.2% to 6.2% a year for U.S. equities over the next 10 years and 4.5% to 6.5% for developed markets outside the U.S. [5]. Vanguard's December 2025 outlook framed the same view as muted returns for U.S. stocks, particularly growth stocks, over the next five to ten years, with high-quality bonds and non-U.S. equities offering better risk-adjusted prospects [5].
Lower expected equity returns hurt the rule in two ways. The average outcome is worse, so the chance of leaving a large legacy falls. And a sequence of poor early years, which is what breaks a withdrawal plan, becomes more likely when starting prices are high. Investors may consider the following adjustments, each of which has historical support:
- Start near 4%, not 5%. Fidelity's 4.6% for 30 years assumes historical returns; a lower equity forecast argues for the low end of its 4% to 5% range [2].
- Hold real assets in the bond sleeve. TIPS at 2.37% real for 10 years and 2.91% for 30 years remove the inflation risk that sank the 1960s cohorts [4].
- Use a flexible rule. Skipping the inflation raise after a losing year, or cutting spending by a fixed percentage when the portfolio falls below a guardrail, raises the sustainable starting rate in most historical tests.
- Keep the horizon honest. A 60-year-old planning to 95 needs 35 years, which Fidelity's table prices at 4.4%, not 5.0% [2].
What a $1 million portfolio looks like under each rule
On $1,000,000, a 4% rule pays $40,000 in year one; Fidelity's 30-year 4.6% pays $46,000; a pure 30-year TIPS ladder at a 2.4% real yield pays about $47,100 and leaves nothing at year 30 [2][4]. The stock-heavy options keep upside; the TIPS ladder removes downside. A balanced portfolio with a partial ladder sits between them, which is why the 4% figure has survived three decades of testing. The rule is a personal-responsibility tool: it converts a lifetime of saving into a spending plan that does not depend on Social Security decisions or market timing, and the 2026 bond market makes that plan cheaper to fund than at any point since 2007.
With TIPS yielding 2.4% above inflation, a 4% inflation-adjusted withdrawal can be funded for 30 years without stocks, so the 2026 risk to the rule comes from equity valuations, not from bonds.
Key takeaways
- Bengen's 1994 study found that a 4% initial withdrawal with 50% stocks lasted at least about 35 years in every start year since 1926 [1].
- Fidelity's 2026 guidance supports 4.6% for a 30-year retirement and 4.4% for 35 years at 90% confidence with a 50/40/10 mix [2].
- On July 21, 2026 the 10-year Treasury yielded 4.50% and 10-year TIPS 2.37% real; a 30-year TIPS ladder at 2.4% real funds a 4.7% withdrawal [3][4].
- Vanguard projects only 4.2% to 6.2% a year from U.S. stocks over the next decade, which argues for the low end of the withdrawal range [5].
- CPI inflation of 3.4% in the year to June 2026 makes inflation-linked bonds the natural partner of a fixed real withdrawal [6].
Frequently asked questions
Is the 4% rule still safe in 2026?
Historically a 4% inflation-adjusted withdrawal from a balanced portfolio lasted at least about 35 years, and with 10-year TIPS yielding 2.37% real in July 2026 the bond side can fund a 4% withdrawal alone for 30 years. The main risk is a decade of below-average stock returns, which Vanguard's forecast of 4.2% to 6.2% suggests is plausible [1][4][5].
How much can I withdraw from $1 million in retirement?
A 4% rule pays $40,000 in the first year, rising with inflation. Fidelity's historical analysis supports about $46,000 for a 30-year horizon at 90% confidence with a 50% stock portfolio [2].
What is a safe withdrawal rate for a 35-year retirement?
Fidelity's analysis puts it at 4.4% for a 50/40/10 portfolio at 90% confidence, below the 5.0% it finds for 25 years [2].
Do TIPS make the 4% rule safer?
Yes. TIPS pay a fixed yield above inflation, so a ladder at 2.4% real can deliver an inflation-adjusted 4.7% of the starting balance for exactly 30 years regardless of the inflation rate, removing the scenario that historically broke the rule [4].
Sources & References
- [1] William P. Bengen, Determining Withdrawal Rates Using Historical Data, Journal of Financial Planning (1994; FPA reprint)
- [2] Fidelity Viewpoints: How can I make my retirement savings last? (May 26, 2026)
- [3] U.S. Treasury: Daily Treasury Par Yield Curve Rates, July 2026
- [4] U.S. Treasury: Daily Treasury Par Real Yield Curve Rates, July 2026
- [5] Vanguard: Setting realistic expectations, 10-year return forecasts (as of June 30, 2026)
- [6] DataPorium Economic Metrics (CPI)
