Morningstar Raises Safe Withdrawal Rate to 3.9%; Retirees Withdrawing Only 2.1%
Married retirees withdraw 2.1% annually while spending 80% of guaranteed income such as Social Security, versus Morningstar’s recommended 3.9% safe withdrawal rate raised from 3.7% in December 2025. Median 401(k) balance of $133,000 funds only $5,300 a year at 4%, or 2.2 years of income.
1. Morningstar’s Updated Safe Withdrawal Rate
Morningstar’s analysis in December 2025 increased the recommended initial withdrawal rate from 3.7% to 3.9%, nearly matching the traditional 4% rule and advising retirees adjust spending based on market conditions, potentially allowing withdrawals up to almost 6%.
2. Actual Retiree Withdrawal Patterns
Analysis of 70,000 retirees shows married individuals with at least $100,000 in assets withdraw 2.1% annually, singles 1.9%, and overall spending represents about 80% of guaranteed incomes such as Social Security, indicating more frugal behavior than expert guidelines.
3. Median 401(k) Balance Implications
Vanguard data reveals the median 401(k) balance at retirement stands at $133,000, funding just $5,300 per year at a 4% rate—or 2.2 years of income—highlighting challenges for those with modest savings and the prudence behind cautious withdrawal strategies.