You spent decades building a $2 million portfolio. Now you face a different question: how much of it can you spend each year without running out? Current research on the safe withdrawal rate gives a clearer answer than the old "4% rule" ever did.
Morningstar’s State of Retirement Income report, released in December 2025, puts the safe withdrawal rate for new retirees at 3.9%.1 On a $2 million portfolio, that is $78,000 of income in your first year, adjusted for inflation each year after.1 That rate carried a 90% probability of the money lasting 30 years.1 Bill Bengen, the researcher behind the original 4% rule, raised his recommended rate to 4.7% in his 2025 book A Richer Retirement; that is $94,000 in year one.2
So a reasonable starting range for a new retiree with $2 million is $78,000 to $94,000 in year one. Social Security, pensions, and other income sit on top of that. Your own number depends on your time horizon, your flexibility, and how markets behave early in your retirement. Here is how to think it through.
Safe Withdrawal Rates on a $2 Million Portfolio: 2026
The table below shows what $2 million supports at different withdrawal rates, and the conditions under which each rate held up in current research.
| Withdrawal Rate | Year-One Income on $2M | Probability of Success | Time Horizon | Source |
|---|---|---|---|---|
| 3.1% | $62,000 | 90% | 40 years | Morningstar1 |
| 3.5% | $70,000 | 90% | 35 years | Morningstar1 |
| 3.9% | $78,000 | 90% | 30 years | Morningstar1 |
| 4.3% | $86,000 | 90% | 25 years | Morningstar1 |
| 4.7% | $94,000 | Succeeded in every historical 30-year retirement since 1926 | 30 years | Bengen2 |
| 4.9% | $98,000 | 90% | 20 years | Morningstar1 |
| 5.2% | $104,000 | 90%, with guardrail spending adjustments | 30 years | Morningstar1 |
Morningstar figures assume roughly 40% in stocks, annual inflation adjustments to spending, and a 90% chance the portfolio lasts the full horizon.1 Bengen’s figure assumes a diversified stock and bond portfolio, including small-cap stocks, over 30 years.2 All figures are pre-tax.
Notice that your time horizon does most of the heavy lifting. If you retire at 65 and plan to age 95, the 3.9% base case applies, or $78,000. If you retire at 55, plan on 35 to 40 years of withdrawals, which lowers the rate to 3.1% to 3.5%, or $62,000 to $70,000. Retire later, or plan for a shorter horizon, and sustainable spending rises meaningfully.
The First Five Years Decide More Than Any Other Period
Two retirees can earn the same average return over 30 years and end up in very different places. What separates them is the order of those returns. Selling investments into a downturn early in retirement locks in losses that later gains cannot fully repair. Researchers call this sequence-of-returns risk.
The data here is striking. In Morningstar’s simulations, nearly 70% of failures involved portfolio losses within the first five years of retirement.1 Retirees whose portfolios posted gains through those first five years went on to deplete their savings only about 4% of the time.1
Three defenses matter most in that early window:
- Hold a stabilizing allocation. Portfolios with 30% to 50% in stocks supported the highest safe withdrawal rates in Morningstar’s testing, because bonds and cash cushion early losses.1
- Draw from the right accounts in the right order. Which account you tap first affects both taxes and how long your portfolio lasts. Our guide, How to Draw Income From Multiple Account Types in Retirement, walks through the sequencing decision in detail.
- Build flexibility into your spending plan from day one, which is where guardrails come in.
Static Rules vs. Guardrails: How Flexibility Raises Your Income
The classic 4% rule is static. You set your withdrawal in year one, increase it with inflation every year, and never look at your portfolio again. That rigidity is exactly why static rates have to start low: they must survive the worst market sequences in the data.
Dynamic approaches adjust spending as conditions change. The best known is the guardrails method. Researchers Jonathan Guyton and William Klinger formalized it in the Journal of Financial Planning in 2006.3 In Morningstar’s testing, a guardrails approach supported a 5.2% starting withdrawal rate at the same 90% success threshold.1 On $2 million, that is $104,000 in year one, versus $78,000 under the static base case.
Here is a simplified, hypothetical example of how guardrails would work on a $2 million portfolio:
- You start by withdrawing 5.2%, or $104,000. Your guardrails sit 20% above and below that rate, at roughly 6.2% and 4.2%.
- Markets fall. Your portfolio drops to $1.65 million, and your planned inflation-adjusted withdrawal of about $107,000 now equals 6.5% of the portfolio. That crosses the upper guardrail, so you cut spending by 10%, to roughly $96,000, until conditions improve.
- Markets rise instead. Your portfolio grows to $2.6 million, and $107,000 is only 4.1% of it. That crosses the lower guardrail, so you give yourself a 10% raise, to roughly $118,000.
The trade-off is real. Guardrails start you at a higher income, but you must be willing to trim spending after bad years. If most of your budget is fixed, a lower static rate, or a blend of the two approaches, may suit you better. If you have room to flex, guardrails can fund a noticeably fuller retirement from the same $2 million.
Common Questions About Spending From a $2M Portfolio
Is the 4% rule still safe in 2026?
It sits between the two leading answers. Morningstar’s research supports a more conservative 3.9% for new retirees.1 Bengen’s updated work supports 4.7% for a broadly diversified portfolio.2 A 4% starting rate remains a reasonable middle ground if you can stay flexible.
How long will $2 million last in retirement?
At $78,000 of inflation-adjusted spending, a balanced $2 million portfolio had a 90% chance of lasting 30 years.1 Spend more, and the horizon shortens. At $98,000 a year, the same confidence level covered about 20 years.1
Do these withdrawal figures account for taxes?
No. All the figures above are pre-tax withdrawals. Your spendable income depends on which accounts you draw from and in what order, which is why withdrawal sequencing deserves as much attention as the rate itself.
Your Number Depends on More Than a Formula
A withdrawal rate is a starting point, not a plan. Before you settle on your own number, several personal factors deserve attention. Taxes come first. Withdrawing $78,000 from a traditional IRA, a Roth IRA, or a taxable account produces three different spendable amounts. Social Security timing, healthcare costs before Medicare, legacy goals, and the market environment at your retirement date all shift the answer as well.
For the bigger picture on turning a portfolio into dependable income, see our guide, Retirement Income Planning: A Guide for Investors With $1M+ in Assets.
Journey Advisory Group is an independent, fiduciary firm serving the Greater Cincinnati, Northern Kentucky, and Dayton areas. Our advisors build retirement income plans that coordinate withdrawal rates, account sequencing, taxes, and Social Security. We intentionally maintain low client-to-advisor ratios, so your plan gets ongoing, proactive attention. If you would like a second opinion on what your portfolio can support, we invite you to schedule a consultation with our team.
References
1. Arnott, A., Benz, C., Guo, T., and Kephart, J. “The State of Retirement Income: 2025.” Morningstar, December 3, 2025. https://www.morningstar.com/lp/the-state-of-retirement-income
2. Huebscher, R. “Bill Bengen Boosts the ‘4% Rule’ to 4.7%.” Advisor Perspectives, August 29, 2025. https://www.advisorperspectives.com/articles/2025/08/29/bill-bengen-boosts-the-4-rule-to-4-7
3. Guyton, J. T., and Klinger, W. J. “Decision Rules and Maximum Initial Withdrawal Rates.” Journal of Financial Planning, March 2006. https://www.financialplanningassociation.org/article/journal/MAR06-decision-rules-and-maximum-initial-withdrawal-rates
Disclosure
Journey Advisory Group, LLC is a registered investment adviser. This material is provided for informational and educational purposes only and does not constitute personalized investment, tax, or legal advice. The withdrawal rates and dollar figures shown are drawn from third-party research and hypothetical illustrations; they do not represent the performance of any Journey Advisory Group client and are not a guarantee of future results. All investing involves risk, including the possible loss of principal, and no strategy, including dynamic withdrawal strategies, assures success or protects against loss in declining markets. Please consult a qualified professional regarding your specific circumstances before acting on any information presented here.