Journal Report · Retirement Research · M10

The 4% Rule Lasts to 95 About 81.5% of the Time. Add 6% Inflation and It’s 14.6%; a 1% Fee Alone Takes It to 61.3%

Derek Horstmeyer stress-tested retirement’s favorite number across more than 10,000 simulated lifetimes. It holds up in calm weather and comes apart under inflation, fees and too little stock.

By Sean Anees Saifi · Capital Wealth · Published Wednesday, October 7, 2026 · Source: The Wall Street Journal, Monday, October 5, 2026, whose market figures are the Friday, October 2 close (Journal Report)

Key Points

Horstmeyer and two George Mason research assistants modeled a 65-year-old with $1 million in a Roth, withdrawing $40,000 in year one and raising it with inflation, sliding from 50% stocks to none by 95. The money lasts in 81.5% of runs, with a median $792,000 left.
Run inflation at 6% instead of 3% and the odds of reaching 95 with money left fall to 14.6%; the survivors’ median balance is just $23,000.
A lost decade like 2000–2009 cuts success to 52.4%; going all-bonds at 65 for the full 30 years cuts it to 35.4%; raising stock volatility to 20% from 15% leaves it at 75%.
A flat 1% annual advisory fee — nothing else changed — drops the odds from 81.5% to 61.3% and the median leftover from $792,000 to $207,000.
The “Follow the Money” chart shows two fixes that beat the base case: trimming the rule to 3.5% (median $1.28 million at 95) and holding a fixed 50/50 mix instead of gliding to zero stocks ($1.65 million).

81.5%

base case: 4% rule, $1 million Roth, money lasts to 95

14.6%

same retiree with 6% inflation instead of 3%

35.4%

all-bond portfolio from 65 for the full 30 years

61.3%

base case plus a 1% annual advisory fee

A single dark-and-amber hot-air balloon floats low over a harvested golden field at dawn, its long shadow on the stubble, with misty rolling hills and wooded valleys fading under a pale pink sky. — In Horstmeyer’s model the retiree who moves to an all-bond portfolio at 65 and stays there reaches 95 with money left only 35.4% of the time; the one who holds a fixed 50/50 mix does better than the base case.

In one line: Across 10,000-plus simulations the 4% rule lasts to 95 in 81.5% of cases — but 6% inflation sinks it to 14.6% and a 1% fee to 61.3%, so treat the rate as a dial and keep the stocks.

Derek Horstmeyer, a finance professor at George Mason, and two research assistants ran more than 10,000 simulations of the most-quoted number in retirement: pull 4% in year one, raise it with inflation, and don’t run out. Their retiree is 65 with $1 million in a Roth, draws $40,000 the first year, and slides from 50% stocks to none by 95. In that base case the money lasts 81.5% of the time, with a median $792,000 still in the account at the finish. Then they started turning the dials, and the rule came apart faster than its fans would like.

Inflation is the killer. Hold everything else fixed and run prices at 6% a year instead of 3%, and the odds of reaching 95 with money left collapse to 14.6%; the survivors finish with a median of just $23,000. A lost decade like 2000 to 2009 — two market slides — drops success to 52.4%. Go all-in on bonds at 65 for the full 30 years, the “safe” move, and the odds fall to 35.4%. Push stock volatility to 20% from 15% and you’re at 75%. The worst scenario in the study fails 85.4% of the time.

The line retirees should circle is the fee. A flat 1% annual charge on the portfolio — nothing else changed — cuts the odds from 81.5% to 61.3%, and the median leftover from $792,000 to $207,000. That’s a quiet, compounding drag doing the work of a mild bear market, and it’s the one variable in the study a household controls completely.

What the chart says that the text doesn’t

Horstmeyer’s “Follow the Money” chart adds two rows the article never gets to, and they’re the most useful things on the page. Trimming the rule to 3.5% pushes the probability bar well above the base case and leaves a median $1.28 million at 95. Holding a 50/50 stock-bond mix for the whole 30 years — the chart’s row for a fixed mix, against the base case’s slide to zero stocks — also beats the base case on probability and leaves the most money of any row, $1.65 million. The glide path to all-bonds, it turns out, is part of the problem, not the safety net.

Our read

This is Retirement (M10) and Time Value of Money (M3), and the lesson isn’t that 4% is wrong. It’s that 4% is a dial, not a rule, and three things turn it: inflation, fees and how much growth you keep. Horstmeyer’s model is kind in ways real life isn’t — the money sits in a Roth, so there’s no tax, and healthcare spending holds still for 30 years — so treat 81.5% as a ceiling. The defenses are in his own chart. Keep a real stock allocation through retirement rather than sliding to zero; the desk’s books hold their equity sleeves at weight for exactly that reason, and nothing changes this week. Keep the all-in cost of advice and funds low, and know the number. And build inflation into the spending plan — a withdrawal you can flex down in a bad year beats a fixed inflation raise you take regardless.

The practical version: run your own number at 4% and again at 3.5%, with your real fee drag and a 6% inflation year or two in the middle, and see which path still has a balance at 95. If the lower rate is the only one that survives, that’s information, not failure. It takes a statement, an evening and any decent retirement calculator — the kind of umbrella you’d rather find in the closet before the sky changes, not after.

What It Means For Your Portfolio

Hold — treat 4% as a dial, and keep the stocks

No portfolio action — the study names no tickers; equity sleeves stay at weight, nothing added, because the glide path to all-bonds is what sinks the model, not the stocks.

General planning principles, not advice for anyone in particular. Re-run your withdrawal plan three ways — at 4%, at 3.5%, and with your actual annual fees and fund costs subtracted — and look at the odds and the leftover balance, not just the first-year income. Horstmeyer’s base case assumes a Roth and static healthcare costs; most households should add a tax line and a rising-care line before trusting the result.

Keep a durable stock allocation through retirement rather than gliding to zero, hold the next two or three years of spending in short bills so a bad year never forces a sale, and give yourself a rule for skipping the inflation raise after a down year. Nothing in the books changes on this — the energy, equity and short-bill sleeves are held at weight.

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