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Article last updated 10 July 2026.
The Bengen US rule, commonly known as the 4% rule, is a retirement planning guideline developed by U.S. financial planner William Bengen in the 1990s. It suggests that retirees can withdraw 4% of their portfolio in the first year of retirement and then increase that amount annually in line with inflation, with a high probability that their savings will last for around 30 years.
It can work as a rough starting point, but it is not directly applicable in the UK without adjustments. UK retirees face different tax rules, market conditions, inflation patterns and portfolio behaviours, and recent research suggests a more realistic safe withdrawal rate is often closer to 3.7–3.9% (gross of fees), not 4%.
The core idea
It suggests that you can withdraw 4% of your retirement savings in the first year of retirement, and then adjust that amount each year for inflation with a high likelihood your money will last at least 30 years.
The sustainable withdrawal rate often linked to the 4% rule was once a default guide for retirement income strategies. However, the FCA’s thematic review highlights that relying on fixed rates without personalisation can lead to poor outcomes. Firms are now expected to embed a Centralised Retirement Proposition (CRP) that includes appropriate income solutions for different client segments, supported by either personalised withdrawal guide rates or robust cashflow modelling. This ensures income strategies are evidence-based, client-specific, and aligned with regulatory expectations. The review found that 84% of firms use cashflow modelling, but 12% use neither a guide rate nor cashflow modelling, which the FCA considers poor practice. Where firms apply a standard guide rate, this must not be applied uniformly without testing against client needs. Advisers should expect variability in retirement income needs and market conditions and use scenario-based planning both deterministic and stochastic to support sustainable outcomes.
UK research shows the 4% rule may be too high
Multiple recent UK analyses indicate that 4% is now on the upper edge of what is considered “safe”:
Morningstar’s UK retirement income study finds 3.9% is the highest safe starting withdrawal rate for a 30 year retirement with inflation adjusted income and a 90% success probability. Further UK-focused analysis for 2026 similarly concludes that 3.9% is the sustainable rate for someone retiring with a balanced portfolio (30–50% equities). The contemporary UK evidence clusters around 3.7–3.9%, meaning the US derived 4% rule is often too optimistic for British retirees.
Why the US 4% rule doesn't translate cleanly to the UK
UK taxation is very different
• UK pension withdrawals are taxable above the 25% tax free amount, whereas in the US, 0% is tax free, it’s 100% taxable at withdrawal
• ISAs offer tax free withdrawals, there is no direct equivalent in the US
UK asset classes behave differently to the US
Bengen’s original research was based on a 50/50 US stock–bond portfolio, with US historical returns.
UK retirees typically hold:
• UK and global equities
• gilts and index linked gilts
• diversified multi asset funds
• Alternative assets including commodities structured products and currency ETFs
UK returns and inflation patterns differ meaningfully from the U.S., affecting safe withdrawal rates.
UK inflation has historically been higher and more volatile
Inflation is one of the biggest threats to a static withdrawal rate. UK inflation tends to differ from US CPI, meaning real withdrawal sustainability behaves differently.
UK longevity assumptions often require longer planning horizons
UK retirees living into their late 80s or 90s still require planning for 30–35 years of income. This makes the rule directionally useful but often requires a more conservative starting rate.
The UK regulator warns against relying on a single withdrawal percentage
The FCA’s thematic retirement advice review questions whether a single fixed rate (like 4%) is ever appropriate, given:
• wide variation in personal circumstances
• longevity differences
• market uncertainty
• vulnerability and behavioural risks
When might the 4% rule still work for UK retirees?
It may still be reasonable as a rule of thumb if:
• the retiree has additional guaranteed income (State Pension, DB pension)
• spending is flexible year to year
• the portfolio includes global diversification
• a 30 year horizon is appropriate
• the retiree understands that 4% is a starting estimate, not a prescription
However, many retirees are withdrawing unsustainably high levels, FCA data shows 40% withdraw more than 8%, which is widely considered unsafe.
The real takeaway: use 4% as a conversation starter, not a strategy
A UK-appropriate safe withdrawal rate is closer to: 3.7–3.9%. The 4% rule can still be helpful educationally, but is not directly portable from US conditions to UK retirement planning without adjustment.
