No Safe Fixed Retirement Withdrawal Rate?

Does the conventional rule (inferred from 1926-1992 U.S. stocks and bonds data) that retirees can safely withdraw an inflation-adjusted 4% from their retirement accounts annually for at least 30 years hold, after accounting for market frictions? In his February 2025 paper entitled “How the 4% Rule Would Have Failed in the 1960s: Reflections on the Folly of Fixed Rate Withdrawals”, Edward McQuarrie recasts the original study including reasonable frictions/constraints, with focus on those retiring during the 1960s. He generalizes the approach by exploring whether any fixed rate of withdrawal can be sustained across a range of aggressive and conservative asset allocations. Finally, he looks at results thus far for individuals who retired in 2000. Using newly assembled net performance data for mutual funds during 1926 through 2023 and exchange-traded alternatives to such funds during 2000 through 2024, he finds that: (more…)