The 4% retirement rule? How to invest so you can withdraw closer to 0% and not run out of money.

Wed, Sep 10, 2025, 10:18 AM 5 min read

How much of your hard-earned portfolio can you sell each year to finance your retirement — without ever running out of cash? 4%? 5%? Something else? Like they say about cars, your mileage may vary.

The classic, most often-used figure is 4%. It’s called the “Bengen rule,” developed in 1994 by financial adviser William Bengen; he called it the “Safemax” rate. But in a new book, Bengen writes that the 4% rule he developed decades ago is outdated, and that today you could probably safely withdraw even more: 5.25% to 5.5%, depending on inflation. Obviously, this is the sort of thing you should discuss with a trusted financial adviser.

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In a recent interview, I went in a different direction with Bengen, asking him whether it’s possible to get by while selling nothing — zero, zip, nada — and instead getting your retirement income from dividends, thus leaving the underlying shares of stock alone to continue appreciating over time.

“Yes,” he says. “I think you could live off those dividends, if you count them as withdrawals.”

Theoretically, if you have a large-enough stock portfolio, it’s doable. For some, like Steve Ballmer, it’s a no-brainer: The former Microsoft MSFT chief executive collects about $1.1 billion per year in dividends from the technology giant, based on the 333 million shares he owns and the current annual dividend of $3.32 per share. A cool billion and change without having to sell a single share. Must be nice.

But you don’t have to be a multibillionaire like Ballmer to have a portfolio of dividend-paying stocks. Although Americans on the upper rungs of the economic ladder continue to own the lion’s share of stock in the United States, data from the Federal Reserve’s Survey of Consumer Finances show that 58% of U.S. families owned stocks in 2022 — the highest level ever recorded by the survey, and a sizable increase from the 32% ownership rate recorded in 1989. The data show stock ownership expanding among lower- and middle-income families, thanks in no small part to the growing availability of 401(k) plans and IRAs. Although many households remain shut out, the overall theme is that stock ownership in the U.S. is gradually expanding, not contracting.