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Supercharging the ‘4% rule’ to ensure a richer retirement

Despite being a giant in retirement planning, Bill Bengen is a humble chap.

He was a financial advisor in the US in the early 1990s trying to figure out how his clients, mostly Baby Boomers like him, needed to save for retirement to ensure they wouldn’t run out of money.

It was becoming a pressing question at that time because his generation was the first to have a long life expectancy in retirement.

Bengen sifted through the academic literature for answers on the topic but couldn’t find anything of use.

So, he investigated the data himself. He wanted to find how much retirees could safely spend each year without the well running dry.

He looked at what would happen if someone retired every year since 1926, and what the outcome would be based on different withdrawal rates - the percentage of your retirement savings that you can safely withdraw each year to ensure your money lasts throughout your retirement.

Bengen was aware that the US had seen some torrid stock market downturns, such as the 89% peak to trough fall during the Great Depression, and the 34% decline in 1973-1974. And he knew that these kinds of bear markets could be harmful to retirees, especially if they happened early in retirement (so-called sequence of returns risk).

Bengen wanted a fixed withdrawal rate that could outlast any 30 year period, even the worst ones.

Using a portfolio of 50% US stocks, 50% US bonds, he found that a starting withdrawal rate of 4.15%, with the initial dollar amount adjusted thereafter for inflation, would ensure a retiree wouldn’t run out of money over a 30-year period.

That 4.15% became the ‘4% rule’, and it ended up revolutionizing retirement planning. It became a simple rule that advisors and their clients could use.

It meant retirees could easily calculate how much they needed to save for retirement - by simply dividing the amount of money they would like to spend each year by the withdrawal rate. So if they wanted $50k each year from their portfolio at a 4% withdrawal rate, they could divide $50k by 4%, equalling $1.25 million.

How 4.15% became 4.7%

Critics of Bengen thought his 4% withdrawal rate was too low. But Bengen himself admitted it was very conservative, based on surviving worst-case scenarios.

Like other advisers, Bengen subsequently found that many retirees didn’t spend enough. They’d take their dividends and interest and try not to tap their principal.  That ran counter to the 4% rule though Bengen copped some of the heat anyhow.

In his new book, A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More, Bengen, now retired, has refined his research and come up with fresh strategies to ensure people get the most out of their retirement.

He’s tinkered with the data, and instead of using a 50% equities/50% bonds portfolio as he initially did, he increased the number of assets and created a more diversified portfolio – adding micro, small and midcap stocks in the US as well as international stocks.

Each one of the additions increases the withdrawal rate that retirees can use. Consequently, Bengen has changed his estimate of a safe withdrawal rate from 4.15% to 4.7%.

Again, that’s a conservative number, and Bengen suggests that he’d probably recommend 5.25-5.5% for today’s retirees.

The biggest enemies for retirees

Bengen says inflation is the biggest enemy for retirees. In the 1970s, US inflation averaged 8-9% per annum. It destroyed many retiree portfolios. That period had significant input into his 4% rule.

The other enemy is a bear market, especially a prolonged one. In America, there were two severe bear markets in the first half of the 1970s. Combined with high inflation, retirees were impacted not only by nominal portfolio declines, but it was worse when adjusted for inflation.

Bengen says if you can avoid periods of high inflation or a bear market at the start of retirement, then things should turn out fine (much easier said than done).

The ‘free lunches’ for retirees

Bengen says there are four ‘free lunches’ that can add to your withdrawal rate without adding additional risk:

  1. Diversifying your portfolio
  2. Rebalancing once a year
  3. Slightly tilting your equity allocations to microcap and small cap stocks
  4. A rising equity glide path

The last point needs elaboration. Bengen suggests starting with a lower stock allocation of 30-40%, before increasing it each year.

Bengen says the data indicates that this results in a higher withdrawal rate.

He admits he was surprised by the results, though they make some sense. If you encounter a bear market early in retirement, having low stock exposure will protect you, and when markets rebound, you’ll be buying into that through your rising equity glide strategy.

His other piece of advice is that everyone is different and your retirement portfolio and spending should be customised to suit you.

 

James Gruber is Editor of Firstlinks.

 

48 Comments
Steve Dodds
August 21, 2025

Interestingly, the default withdrawal from Australian Super when you switch to a pension is 6%.

It seemed high to me, but I went with it figuring our largest super company was smarter than I am.

Kevin
August 19, 2025

When I retired ( early) I looked at the super.Slightly over 400K. Average returns over the long term were around 9% for the fund.Took out $36K as that was around the pension then. $36K has been taken out every year ever since,there's still around $400K in it. Easy maths 'if I take out around the average,then it never runs out of money,and most of it will still be there on death Two or 3 good crashes will run it down,that didn't happen.

So no 4% rule,sequencing risk that didn't happen,I've never listened to the financial industry . Increased it now to $3,600 a month,as it just wouldn't run down. I expect to die with at least 50% of that left ,depending how much life is left in me. While that money isn't needed I would think retirement might be a bit daunting for some. Own a house and I don't think they will have a lot to worry about,but I can understand why the would worry

Aged care etc would change the whole picture

Dudley
August 19, 2025

Time to nought:
= NPER(9%, 12 * 3600, -400000, 0)
= 20.8 y.

Time to half:
= NPER(9%, 12 * 3600, -400000, 400000 / 2)
= 14.5 y.

Dudley
August 19, 2025

Tax 0%, nominal return 9%, inflation 3.5%, ...:

Time to nought:
= NPER((1 + (1 - 0%) * 9%) / (1 + 3.5%) - 1, 12 * 3600, -400000, 0)
= 13.1 y

Time to half:
= NPER((1 + (1 - 0%) * 9%) / (1 + 3.5%) - 1, 12 * 3600, -400000, 400000 / 2)
= 7.6 y

Jack
August 17, 2025

The 4% rule makes sense, and originated, in the US where the average dividend yield is 2%. Dividends alone do not produce enough retirement income to meet lifestyle needs. Selling assets to generate income immediately exposed retirees to market risk and sequencing risk. Those risks increase the need for diversification which reduces investment returns. Together, these factors increase longevity risk. Modest withdrawals, especially early in retirement, are clearly recommended.

The 4% rule has less relevance in Australia because we have the highest dividend yields in the world. See here.
https://www.morningstar.com.au/stocks/australia-has-the-highest-dividend-yields-in-the-world-so-why-the-endless-chase-for-even-higher-yields

Moreover, Australia’s system of franking credits adds additional income to those generous dividends so that it is possible for retirees to generate about 6% income from Blue Chip shares. Therefore, many Australian retirees can live on dividend income alone, without the need to sell assets, while also enjoying the natural capital growth of shares.

Dudley
August 17, 2025

There is the 5% rule:

Tax 0%, return 2.5%, inflation 2.5%, to 87, from 67, PresentValue -$1 (-=in fund), FutureValue $0:
= PMT((1 + (1 - 0%) * 2.5%) / (1 + 2.5%) - 1, (87 - 67), -1, 0)
= 5%
using risk free investments, returns matching inflation.

And the 6%+ rule:

= PMT((1 + (1 - 0%) * 5%) / (1 + 2.5%) - 1, (87 - 67), -1, 0)
= 6.3778%

The difference to the 4% rule, where there is a small chance of having next the $0 after 30 years, is that there is a certainty in 20 years of having $0.

James#
August 17, 2025

Wishful thinking! Spoiler: I'd hazard a guess that no one's personal/family empirical inflation is anywhere near as low as 2.5%!

Dudley
August 17, 2025

"no one's personal/family empirical inflation is anywhere near as low as 2.5%":

Calculated from:
https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release
Jun-21 to Jun-25: 4.49 / y
Jun-16 to Jun-25: 2.98% / y

Slowly approaching time when cumulative net returns on low risk investments equal cumulative inflation.

Use 3.5%?
= PMT((1 + (1 - 0%) * 3.5%) / (1 + 3.5%) - 1, (87 - 67), -1, 0)
= 5.00% / y.

Peter Vann
August 16, 2025

Unfortunately some of the comments below have misunderstood what James has written or jumped to unfounded conclusions.

I suggest that one reads and then re-reads the original 1994 paper Bengen published, link provided below. There are some simple but important points Bengen provides through this his seminal paper.

Bengen simply states that
- spending 4% of your asset portfolio, annually adjusting for inflation, is achievable without running out of assets
- for equity/bond mix of 50:50 and 75:25
- over historical 30 (consecutive) year periods

Note:
- Bengen’s calculation is not a Monte Carlo simulation,
- The 4% is not related to the minimum retirement account withdrawal in Australia,
- The calculations include actual “sequencing risk” in the historical data and market valuation reversion after peaks and throughs
- Capital is not necessarily preserved over time due to asset volatility,
- The initial 4% is very conservative since it is based on a 0% probability of ruin through the historical years used

LINK TO BENGEN 1994 paper
www.financialplanningassociation.org/sites/default/files/2020-05/7%20Determining%20Withdrawal%20Rates%20Using%20Historical%20Data.pdf

Dudley
August 16, 2025

No mention of 'reversion' in BENGEN 1994 paper:
https://www.financialplanningassociation.org/sites/default/files/2021-04/MAR04%20Determining%20Withdrawal%20Rates%20Using%20Historical%20Data.pdf

Peter Vann
August 16, 2025

Dudley

Given Bengen uses sequential year by year returns, the actual reversion that occurred is captured,

BTW; Most Monte Carlo simulations do not account for valuation reversion forces, and random drawing of annual returns from historical time series destroys any reversion information.

Dudley
August 16, 2025

"Bengen uses sequential year by year returns, the actual reversion that occurred is captured":

Thanks, annual rolling 30-year periods since 1926 to recent = ~70 periods.

"Most Monte Carlo simulations do not account for valuation reversion forces, and random drawing of annual returns from historical time series destroys any reversion information.":

Yet both schemes produce similar estimate of safe withdrawal rate.

Rethinking Retirement: Bill Bengen’s Latest Insights on the 4% Rule
Robert Huebscher
Feb 14, 2025
'His new 4.7% rule aligns with Monte Carlo simulation research.'
https://roberthuebscher.substack.com/p/rethinking-retirement-bill-bengens

Peter Vann
August 16, 2025

Yes interesting comment from Robert Huebscher that Bengen’s work** (which explicitly incorporates asset valuation reversion) produces similar estimate of safe withdrawal rate to Monte Carlo simulations, MC (that usually don’t incorporate valuation reversion).

Given the range of withdrawal rates from MC (personal observation from reading numerous papers), Robert Huebscher’s comment is likely a broad generalisation; shame he didn’t provide a reference or data to support his comment.

However there are two opposing major differences between Bengen’s work and MC. Bengen’s inclusion of valuation reversion will result in higher withdrawal rates whereas his use of 0% probability of ruin (MC use higher probabilities eg 10-30%} will lower his higher withdrawal rates!!


** NOTE I have not seen his just released book so I’m basing my comments on the calculation method in his 1994 paper.

Dudley
August 16, 2025

"MC (that usually don’t incorporate valuation reversion)":

I say it does - by randomly selecting returns from actual series that are mean (trend) reverting and reassembling the returns into synthetic series will result in most of the synthetic series showing the same general trend as the actual series from which the returns were randomly selected.

There will be 'anomolous' synthetic series that spear off into the yonder but the geometric average of the synthetic series will trend like the actual series.

The SUM of a series of returns expressed as a return% does not equal the total return.

The PRODUCT of returns expressed as (1 + return%) does equal the total return.
The order of the returns does NOT matter.

Peter Vann
August 17, 2025

Dudley, no no no!

“I say it does - by randomly selecting returns from actual series that are mean (trend) reverting and reassembling the returns into synthetic series will result in”

the synthetic series NOT showing the same general reversion trends as the actual historical series shows since the random drawing of returns has BROKEN the valuation reverting link from one year to the next.

Around the end of the 2000 decade a couple of Aussie academics did a similar calc as Bengen, except they randomly draw returns from historical return series. Their safe withdrawal rates were lower than Bengen’s and they agreed with me that they lost the benefit of the valuation mean reversion link.

More technical stuff;
“the order of the returns does NOT matter”
They DO matter when there are withdrawals (or contributions) since the end portfolio value WILL depend on the order of the returns (think of sequencing risk as an example). Thus breaking the valuation reversion link by random drawing historical returns will impact safe withdrawal calculations.

Dudley
August 17, 2025

"random drawing of returns has BROKEN the valuation reverting link from one year to the next":

And reassembled it across the thousands of synthetic series required to prove anything by statistical analysis of such chaotic data.

If the geometric mean of the multitude of synthetic series converges on the total return of the actual series then the method has captured what ever 'reversion to mean' existed in the actual series.

If it does not converge then the method is erroneous.

"Aussie academics did a similar calc as Bengen, except they randomly draw returns from historical return series. Their safe withdrawal rates were lower than Bengen":

Slightly as I recall. Readily assignable to different markets and difference variance.

"They DO matter when there are withdrawals (or contributions)":

Contributions, taxes and withdrawals are likely far from random, lots of contributions and taxes at first then lots of withdrawals later.

I'm not convinced that randomising even those have any effect on the geometric mean of a multitude of synthetic series formed by multiplying together the net returns, after market returns, contributions, taxes and withdrawals, where there is convergence on the total return of the actual series.

Peter Vann
August 17, 2025

No comment.

I rest my case.

Dudley
August 17, 2025

"after market returns, contributions, taxes and withdrawals, where there is convergence on the total return of the actual series":

... because the actual series (an individual portfolio) will have returns, contributions, taxes and withdrawals which are reflected in the annual growth rates of the actual series.

Individual portfolios can differ from each other.

The said 'actual' series in these studies is a 'synthetic' or hypothetical portfolio priced on actual market data but not actual transactions.

Matt
August 17, 2025

I’m with Peter on this one. Try asking any retiree who was forced to return to paid employment after the GFC destroyed their retirement plans whether Monte Carlo simulations were useful to them. Actual reversions do matter. Simulated reversions make for nice graphs and academic debate, but academic research won’t feed you in retirement (unless of course you are an academic). One need only look at the fate of the “smartest people in the room” at Long Term Capital to see the folly of over reliance on synthetic financial models.

Dudley
August 17, 2025

"I’m with Peter on this one.":

And I'm with Matt; 'Actual reversions do matter.'

And are present in Monte Carlo simulated synthetic series to the extent they were present in the actual series.

The order in which the time slices are RANDOMLY assembled does NOT matter when thousands of synthetic series are analysed as a whole. The geometric mean converges on the actual series value as more synthetic series are analysed together.

If not then the analytic method is rotten.

"Simulated reversions make for nice graphs and academic debate, but academic research won’t feed you in retirement":

Believers in reversion 'buy the dips', some 'sell the blips'.
Some win, some lose, on average they do no better than 'come by chance' - due to the chaotic markets.

"retiree who was forced to return to paid employment after the GFC destroyed their retirement plans":

Under capitalised, over exposed to risk that Monte Carlo simulation and Bergen highlight in their "academic research" using PAST data knowing it does not predict.

Dudley
August 16, 2025

Bill Bengen's latest book.

Two reviews:

Supercharging the ‘4% rule’ to ensure a richer retirement
James Gruber
13 August 2025
https://www.firstlinks.com.au/supercharging-the-4pc-rule-to-ensure-richer-retirement

Rethinking Retirement: Bill Bengen’s Latest Insights on the 4% Rule
Bengen's new book is a must-read for advisors and is destined to be a classic text on retirement planning
Robert Huebscher
Feb 14, 2025
'will be released on August 5'.
https://roberthuebscher.substack.com/p/rethinking-retirement-bill-bengens

Adam
August 15, 2025

the percentage rates you quoted are for superannuation WITHDRAWLS not what you spend. can always use the spare to invest outside super or recontribute to super. No one say you have to spend 14% of your money every year at 95yo!

pete
August 15, 2025

Love some clarification from anyone in the comments please, thank you.
My understanding of the "rule" ( I align with the 5% choice ) is that—based on conservative assumptions—if we assume an after-tax asset growth rate of at least 7.5% per year and an inflation rate of 2.5%, then withdrawing 5% annually should not only preserve the original capital in real terms but also allow it to grow with inflation over time, meaning the portfolio value would continue compounding year after year, regardless of how many years I live.

Dudley
August 15, 2025

"based on conservative assumptions":
No assumptions made.
Actually based on Monte Carlo Simulation of rehashing actual market outcomes.
There is a Leap of Faith that the past predicts the future range of outcomes.

If future eventuates with; tax 0%, return 7.5%, inflation 2.5%, to 97 from 67, withdrawal 5% / y, PresentValue capital -1 (-=in fund):
= FV((1 + (1 - 0%) * 7.5%) / (1 + 2.5%) - 1, (97 - 67), 5%, -1)
= 0.92 (not 1.0)
because the real rate of return is:
= (1 + (1 - 0%) * 7.5%) / (1 + 2.5%) - 1
= 4.8780488% / y (not 5%).

For likely life times, the real value of the fund remains little affected.

Lauchlan
August 15, 2025

What you’re not taking into account is sequence of returns risk. The market does not steadily rise at 7.5% (or whatever) each year. It might go up 15% one year and down 7.5% the next, and so on. If you get hit with say ten years of -15% growth when you first retire and then ten years of +20% growth after,, it negatively impacts your portfolio and how much you have left at the end (your “legacy”). Bengen actually modelled the legacy, and found if you have an 80/20 portfolio instead of a 50/50 one, your chances of retaining a large legacy are much greater, with only a small impact to your “4%” withdrawal rate. That’s because the additional equities in 80/20 allow you to regrow your portfolio faster after a downturn.

Combine this with a Harold Evensky “bucket” strategy, and your chances of retaining a good legacy improve considerably.

Dudley
August 15, 2025

"and found if you have":
Wrong tense.

'and found if you had'
Bengen did not travel into the future(s) and return to the present with actual outcomes.

Pete
August 16, 2025

Thanks Lauchlan, good points

Kevan Reed
August 15, 2025

Another Aussie, fairly hard to compare Super between Aus + US, but they have basically the same theory.
Our Story is we retired at 55 (not available now) and we can never out of money, also expecting legacies down the line. Our first legacy has already been passed down to our children to buy their houses, extra legacies will pay off these houses.
We get $90,000 after tax and goes up the CPI. I had 33+yrs in the public service including the 9 yrs in the RAAF. Everything was planned by me 40 years at age 25. We all have life insurance, wills and private health insurance (thank goodness).So its not just about Super, while Cancer is around. Good luck Everybody.

Kevin
August 14, 2025

I put him in the same basket as Markowitz ( too much diversification is never enough ).Causes a lot of damage to people as they repeat the 4% rule.

Dividends yields were more than 4% when I retired. Earned income was replaced by passive income ( dividends) .The dividends were higher than earned income I kick myself for not retiring earlier.
Excess income still goes back into more shares,producing more income etc etc etc.

4% rule,nonsense.

Kevin
August 15, 2025

And checking those margin loan statements that are an excellent source of info for me.
Going through COVID and the bounce back
then
30/6/2020 (14%)
2021 36.7%
2022 ( 2.4 )
2023 12.6%
2024 23.6%
2025 25.1%
2026 ? Who knows,the income in 2026 will probably be higher than 2025.The income in 2025 was higher than 2024. The income increased every year,the capital value increased ( decreased) as shown.

There is no drawdown,there is no 4% rule .
I would never dream of looking at the capital values on 30/6 of each year,then working out what the return was .What a waste of time.Same as ever,I can't believe how good this is working out,what the hell do we spend all this money on.

Disgruntled
August 15, 2025

It's not nonsense, it says you shouldn't run out of money and you proved the point.

I plan to max out my TBC at 60 when I can retire using my Super, TBC will likely be $2.1M then.

I'll also have dividend paying shares outside of Super to take advantage of the tax free threshold.

@4% drawdown this will give me circa $100k tax free income.

All things being equal, balance of both accounts grow as earnings should be higher

At 65 drawdown rate rises to 5%. Even accounting for inflation, income should be higher, real terms.

@80 Drawdown rate hits 7% which is around average earnings for Superannuation

80 to 85 I'd probably be taking the earnings equivalent and still have Capital + Capital Growth at that stage

85 to 89 it goes to 9%. I doubt I'll live much longer than that.

OldbutSane
August 18, 2025

The withdrawal rates for super pensions are designed so that your balance in super will run out.

Once your portfolio generates less income than you are required to drawdown then you will need to start withdrawing capital. That said, just because have to withdraw the money from super doesn't mean you have to spend it!

Johns
August 14, 2025

I was told 25 years ago how much you needed in savings. The rules then were
At 65 = 13 times annual living expenses
At 60 = 15 times
At 55 = 17 times
Under 55 = 20 times

Again close to the 4% rule. And it makes sense that the older you are when you retire, the shorter your money has to last so the lower the multiple. Obviously assumes you spend your last dollar the day before you die

Dudley
August 14, 2025

"how much you needed in savings" ..."At ...":

Using time to death to better personalise:
https://www.firstlinks.com.au/how-much-do-you-need-to-retire-comfortably

Minimum average net real total return per year required throughout retirement:

https://iili.io/JV1zXJp.png
[ https://freeimage.host/i/image.JV1zXJp ]

Example: Cell C5; with capital 128 times expenses, can lose 1.92% every year until death in 64 years from present.

Increasing Age Pension income 'kicking in' complicates calculations, so table less useful where that occurs - but not irrelevant

John Edwards
August 14, 2025

I’m curious what is a sustainable rate for Australians given our enhanced share market returns from franking, and the tax benefits of super in pension mode?

Wildcat
August 14, 2025

Interestingly we've moved closer to 5% over time although I was aware of the 4% rule. I still regard 5% as a little cautious, especially once the client is over 65 (Nothing to do with the ABP drawdown rates). We found retirees might be limiting their lifestyle or being too cautious about in life giving if that was important to them. Yes we can have a sustained period of low returns but we don't run set and forget strategies for 30 years which the 4/5% rule implies. We review every year and adjust course as required by lifestyle, markets, family needs etc. This allows you to permit higher levels of drawdowns, especially in the early years where travel may be a higher priority, without overly jeopardising the later years. Also simplistically if you earn 5% for income and 2.5% for inflation (yes it's been a bit higher recently) then your total return target is 7.5% as a long term nominal average return. This hasn't represented a challenge over the last 20 years. In fact many of our clients have seen their wealth increase not only in nominal terms but real terms as well. This means they can either live longer than Yoda or start in life giving and still be safe.

Aussie HIFIRE
August 14, 2025

Another factor for Australians is the very generous age pension which provides a risk free $45,000 a year to a couple who own their own home. Between that and say $400,000 in super which would give an income of $60,000 pa with zero tax, likely zero dependents, and zero mortgage to pay which should allow for a very comfortable retirement!

The Bludger
August 14, 2025

Agreed at 67 a paid off house, 400k in super = 60k PA income. What else do you need?

Does this make the 4% rule discussion superfluous for Australia? Even for early retirement - you just need enough capital for a bridge to 67.

Maybe the 4%+ rule make sense for a bridge? But I think a bridge that is 10 - 15 years then a withdrawal rate could be much more aggressive around the 6 to 8%. But I haven't seen much discussion on this topic.

Aussie HIFIRE
August 15, 2025

For the portion of your funds that is the bridge to retirement I think you could simply just go for having the amount that you will use saved up and mostly/all invested in pretty defensive investments. So if you have 10 years to go until you can get the age pension and are spending 60k a year, have 600k saved with say $400k in high interest savings accounts/term deposits or some bonds, and the other $200k in equities or the like. Or just all in high interest accounts and term deposits. Use the interest you get along the way as a buffer.

Lisa Romano
August 14, 2025

Bengen's legacy is that he helps us think more clearly about long term market effects as they relate to our own goals, framed within his own extensive research. I often find myself too conservative in withdrawals, aware of the recent impacts of inflation on cost of living, but not taking into account its more positive effect on stock portfolios.

Rob
August 14, 2025

Totally academic to "overlay" the US 4% rule on Australian retirees where 4% is only "possible" ex Superannuation accounts if you are under 65. As a "start" point as to how much you should have in Super at the point of retirement - 25 times your cost of living, ie the inverse of 4%, has merit

Under age 65  4% 
65 – 74  5% 
75 – 79  6% 
80 – 84  7% 
85 – 89  9% 
90 – 94  11% 
95+  14% 

john
August 14, 2025

Just because you have to withdraw more than 5% from super does not mean you have to spend it.

So you could follow a 4% (or 5%) rule in Australia.

OldbutSane
August 15, 2025

Spot on. Too many people think that just because you have to withdraw a certain amount from the pension environment that this is equivalent to having to spend it.

Likewise Kevin's comment above about having more than 4% to spend - 4% was a conservative estimate of a minimum you could sustainably spend.

JimG
August 14, 2025

Even though there are minimum draw down rates for Super in the pension phase, there is no maximum rate, and there are many ways to effectively go under the minimum rate (by for example recontribution).

Robert Barnes
August 14, 2025

For Australians, tax-free super in retirement makes a significant difference to these calculations.

James
August 17, 2025

"For Australians, tax-free super in retirement makes a significant difference to these calculations."

Fear not, Albanese, Chalmers & Co (& quite a few Firstlinks readers) are fomenting to change the tax free super status in retirement!

A solution looking for a problem! Simply cap total super at X amount, indexed. Solves the problem of mega accounts getting huge tax concessions and puts envy to bed without collateral damage to the rest of us.

Peter Vann
August 17, 2025

Robert
In the paper by Bengen that the article refers to Bengen says
“The effect of taxes is neglected”” when he outlines his method for applying asset returns.

I have provided a link to his paper in a comment above.

Jeff O
August 18, 2025

I’d add a no 5 - scenario test (rather than MC) your income/balance sheet - once a year

And Peter V et al note above - this paper focuses on “sustainable” income on “retirement” assets - but apart from taxes, it does not account for excess capital locked up in homes and potential other financial and lifestyle assets, taking advantage of gearing post “retirement” and intergenerational issues/ bequests.

A lot of asset rich Australians withdraw excess income, do not spend, gear or give with a warm hand or keep for bequests

 

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Economy

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Investing

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Property

Australian house price speculators: What were you thinking?

Australian housing’s 50-year boom was driven by falling rates and rising borrowing power — not rent or yield. With those drivers exhausted, future returns must reconcile with economic fundamentals. Are we ready?

Shares

ASX reporting season: Room for optimism

Despite mixed ASX results, the market has shown surprising resilience. With rate cuts ahead and economic conditions improving, investors should look beyond short-term noise and position for a potential cyclical upswing.

Property

A Bunnings play without the hefty price tag

BWT Trust has moved to bring management in house. Meanwhile, many of the properties it leases to Bunnings have been repriced to materially higher rents. This has removed two of the key 'snags' holding back the stock.

Investment strategies

Replacing bank hybrids with something similar

With APRA phasing out bank hybrids from 2027, investors must reassess these complex instruments. A synthetic hybrid strategy may offer similar returns but with greater control and clearer understanding of risks.

Shares

Nvidia's CEO is selling. Here's why Aussie investors should care

The magnitude of founder Jensen Huang’s selldown may seem small, but the signal is hard to ignore. When the person with the clearest insight into the company’s future starts cashing out, it’s worth asking why.

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