In 1994 Bill Bengen worked out how much you can spend in retirement

1994. William Bengen, a California financial planner, published a paper in the Journal of Financial Planning that was going to name itself: the '4% rule'. His calculation was mechanical.

He took a hypothetical portfolio: 50% U.S. stocks (the S&P 500), 50% intermediate Treasury bonds. He wound it back through every possible historical year from 1926 to 1976: fifty-one different retirements. In each one he asked the same question: 'How much can I take out in year one and raise for inflation each year afterwards without ending up at zero before thirty years are up?'

The worst case came out with the retiree who started in 1966: the Vietnam War, a decade of runaway inflation, a flat market. In that portfolio, 4.15% held. Bengen rounded it to 4 and named it SAFEMAX.

Instructions for your own retirement, if the savings are yours: 1. Add up your capital on the day you retire. 2. In year one, withdraw 4%. 3. Every year after, raise that figure by CPI, exactly.

Michael Kitces reworked the numbers in 2020: with today's portfolios, 4.5% also holds. Nobody has come in under 4. The rule has survived three crises, an energy war and a pandemic. If you've saved €300,000, your yearly draw is €12,000. Raise that figure by inflation each January and stop looking at it.

Bengen retired on his own rule in 2013, at the age of 66. He still posts notes about his personal portfolio, almost always to say the same thing: he hasn't touched it.