Is the 4% annual Withdrawal Rule still safe? What 125 years of market history from 25 countries say

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The 4% rule was built on the luckiest jar on the shelf.

Image AI-generated by author with ChatGPT

By Hootan Nakhost

Special to Financial Independence Hub

The 4% rule is an American rule

The 4% rule is one of the best-known rules in personal finance. It originates from a 1994 study by financial planner William Bengen. He calculated the maximum safe withdrawal rate for every retirement start year since 1926. He found that withdrawing 4% or less of the starting portfolio in the first year, then raising that amount with inflation each year, lasted 30 years in every case he tested.

The 4% rule is useful because it is simple: you just need to remember one number. Take how much you spend each year, divide by 0.04 (or multiply by 25), and that is the money you need to retire.

One country is a small sample

The 4% number is based on a single country’s history that happens to be one of the best-performing markets in the world. Since 1926, the U.S. hasn’t had a war fought on its own soil, and since 1945 it has been the world’s major power. Retirees in other rich countries were not so lucky. Japan’s Nikkei index took 34 years to get back to its 1989 peak. In the UK, stocks fell about 73% in 1973–74, and inflation reached about 24% in 1975. German savers were wiped out twice: by the 1923 hyperinflation and again by the 1948 currency reform. None of this shows up in U.S. history.

What I tested, and what I found

My simulator uses the Dimson-Marsh-Staunton dataset, which covers stocks, bonds and inflation back to 1900 for most countries; I used the 25 of its countries that count as developed markets, each only from the year it became one (Japan from 1930, Spain from 1959), following Anarkulova et al. (2023) where the data allow.

For this post I replayed the same 30-year retirement 10,000 times, stitched together from blocks of real history from 1900 to 2024: once with U.S. history only, and once with all 25. In the 25-country case, each block of history comes from a country drawn at random. This setup avoids the survivorship bias you get when you always pick the U.S. as the home country. The retiree holds either 100% stocks or a balanced 60/40 portfolio, and spends a fixed, inflation-adjusted amount. To keep it simple, there are no taxes, fees or government benefits.

Bengen asked for a rate that never failed in U.S. history. With thousands of simulated retirements, some will always fail, so I report the rate that lasted 30 years in 9 out of 10 of them.

Once each retiree’s home market can be any of the 25 countries, the rate that lasts 30 years 90% of the time falls by about a third.

What gets you back to 4%

The weak 25-country result assumed each retiree held only their home market. With 30% of the stocks at home and 70% in the rest of the world, the same 60/40 portfolio’s rate rises from 2.8% to 3.6%. With 100% stocks, it reaches about 4.1%.

In this test, bonds lowered the rate. The simulation always uses the retiree’s own country’s bonds, the kind that inflation and war destroyed, so the finding is narrow: home-country bonds didn’t add safety. Global and real-return bonds weren’t tested.

One caveat: an all-stock portfolio can lose half its value in a crash, and the simulation assumes you never sell.

Do you even need 4%?

Benefits in Canada like CPP and OAS change the question. They’re indexed to inflation and paid for life, so your savings only have to cover the gap. Consider a 65-year-old couple with C$1 million in home-country stocks and maximum CPP and full OAS, about $54,500 a year at 2026 rates. Under the 25 countries’ history, their savings can add about $27,500 a year, 2.75% of the $1 million. Together that’s about $82,000 a year of spending, two-thirds of it from benefits. Maximum CPP is uncommon, and these figures are before tax and any OAS clawback. The number that matters is how much of the spending the portfolio has to cover.

What I take from this

On U.S. history alone, about 4.2% held up. Across 25 countries, a home-only 60/40 portfolio held up at about 2.8% and a balanced global one at about 3.6%. Only an all-stock portfolio spread around the world held up at 4%, and only for a retiree who could sit through a 50% drop without selling. Continue Reading…

How to find the Money Leaks you don’t know about

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Image created with Grok Imagine by Expense Canary

By Karla Castro

Special to the Financial Independence Hub

Most of us know roughly what we spend on rent, groceries and gas. The harder money to track is the money we never notice leaving. I call these money leaks. A streaming service you signed up for once and forgot. A free trial that quietly turned into a paid plan. A monthly account fee your bank charges every month. A charge from a merchant you don’t recognize.

None of these is large on its own. That is exactly why they last. A small charge that repeats every month can go unnoticed for a long time.

Here is how to find these leaks yourself, with or without an app.

Start with your statements

Pull up the last three months of statements for every chequing account, savings account and credit card you have. Every one. Look for three things:

First, recurring charges. Anything that shows up on the same day each month, or each year, is a subscription. Ask yourself whether you still use it.

Second, bank fees. Look for monthly account fees, overdraft fees, non-sufficient funds fees, foreign transaction fees and ATM fees. These often appear as short codes, so read each line.

Third, charges you don’t recognize. Some are merchants billing under a different name. Some are not. Either way, you want to know.

Check your app store subscriptions

Many subscriptions are billed through your phone, not directly by the company. On an iPhone, open Settings, tap your name, then Subscriptions. On Android, open the Google Play Store, tap your profile icon, then Payments and subscriptions. You may find apps you stopped using long ago still renewing.

Search your email

Search your inbox for words like “receipt,” “renewal,” “trial” and “subscription.” Receipts and renewal notices often arrive by email even when the charge is buried on a statement. When you start a free trial, put the end date in your calendar the same day.

Why leaks hide across banks

If you have one bank account and one credit card, a manual review is manageable. Many Canadians and Americans have more than that. A chequing account at one bank, a credit card from another, a line of credit somewhere else.

Each bank only shows you its own piece. A subscription on your travel card won’t appear in your main banking app. A fee on an old savings account you rarely log into can run for a long time. Leaks hide in the gaps between accounts.

What to do when you find one

Finding a leak only helps if you act on it. Here are the usual options:

Cancel it. If you no longer use a subscription, cancel it through the company’s website or your app store settings. Then check your next statement to confirm the charge stopped.

Ask for a refund. If you were charged for a renewal you didn’t want, contact the company and ask. Some will refund a recent charge, especially if you haven’t used the service since.

Ask your bank about fees. If you were charged an overdraft or account fee, call and ask whether it can be reversed. If fees keep coming, compare accounts. Some online banks and credit unions offer accounts with no monthly fee.

Report what you don’t recognize. If a charge is truly unfamiliar, contact your bank or card issuer right away.

Using a tool (full disclosure)

Disclosure: I built Expense Canary, so I am biased. You can do everything above by hand. I built an app because doing it across several banks every month is tedious.

Expense Canary links your accounts and cards from different banks into one view. There is no budget to set up. It flags monthly account fees, overdraft and other bank fees, recurring charges including free trials that turned paid, and unfamiliar or larger than usual charges. You can also turn on optional notifications when new charges post.

It connects read only through Plaid in the US and Canada. It never sees or stores your bank login and can never move or transfer money. It also won’t cancel anything for you. It shows you what it found, and you decide what to do. It provides information, not financial advice.

It is available on iOS and Android, with a 7-day free trial, then $4.99 USD a month (local pricing may vary). You can learn more at https://expensecanary.com.

Whatever method you choose, the habit matters more than the tool. Set a reminder to review every account once a month. The leaks you find are money you get to keep.

Karla Castro is the founder of Expense Canary, a read-only app for iOS and Android that helps people in the US and Canada spot forgotten subscriptions, hidden bank fees, and unusual charges across their linked banks. She is based in Vancouver. https://expensecanary.com

Rich by Income or by Wealth? Household rankings by the Prehn Institute

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Photo credit: Felix Nikolas Prehn

In 2025, the highest-earning fifth of U.S. households received 52.4 per cent of all household income, and the lowest fifth received 3.0 per cent, the Census Bureau reported 15 September 2026.

That is a ladder ranked by what households take in. A second ladder, ranked by what households own, gives a different picture, and it is the one The Prehn Institute chose for its September 2026 report.

Ranking by income and ranking by wealth

The Census release, “Income in the United States: 2025,” put the top 5 per cent of households at 23.5 per cent of aggregate income. Median household income was $87,460, the highest on record in a series that starts in 1967.

The Gini index, which runs from 0 when every household earns the same to 1 when one household earns everything, was 0.490. The bureau found it not statistically different from 2024. Household income rose 1.7 per cent at the 90th percentile and showed no statistically significant change at the 10th. Income at the 90th percentile, $261,300, was 13.06 times income at the 10th percentile, $20,010, the bureau said.

The institute’s report, “The Hidden Regressive Tax,” by Felix Nikolas Prehn, is posted on Zenodo. It sorts households by wealth, meaning everything a household owns minus everything it owes. Four groups result: the top 1 per cent, then the 90th to 99th percentiles, then the 50th to 90th, then the bottom half.

The report sets out why that ranking became possible. Since 2019, it notes, the Federal Reserve has published the Distributional Financial Accounts, a quarterly reconstruction of the balance sheet of each wealth group from the top 1 per cent to the bottom 50 per cent, going back to 1989. Combined with standard price and money series, the report states, those accounts make it possible to measure who captured the gains rather than assert it.

The Fed’s ranking by income

The Federal Reserve’s Distributional Financial Accounts sort households by wealth, and they also sort the same households by income. The second set is the Fed’s own work, not the report’s. The paper does not use income groups.

In the income-ranked files, the top 1 per cent of households by income held 25.2 per cent of US household wealth in the second quarter of 2026, up from 16.6 per cent in the third quarter of 1989. The bottom 20 per cent by income held 2.8 per cent.

Stocks are more concentrated still. Households in the top 1 per cent by income held 39.6 per cent of corporate stocks and mutual fund shares outside retirement plans, according to the same files.

The same files show the other side of the balance sheet. The bottom 20 per cent by income held 7.1 per cent of consumer credit, the Fed’s data show, a larger slice of the nation’s card and loan balances than of its household wealth.

Even when households are ranked by income, ownership is concentrated at the top. These are income groups, though, a different set of households from the wealth groups.

The report’s ranking

Ranked by wealth, the report places the top 1 per cent at 32.5 per cent of household wealth in the second quarter of 2026, using the Fed’s data, and the bottom half at 2.3 per cent.

Those figures should not be set against the income-group figures as if they measured the same thing. The top 1 per cent by income and the top 1 per cent by wealth are different lists of households, and a bottom fifth is a different slice of the country from a bottom half. Each number belongs to its own ladder.

The report ranks by wealth because of the question it asks. Its subject is the asset-poor, which the paper describes as households whose economic position rests on wages, cash and rented housing. Its argument is that money creation on the scale seen since 2000 transfers real resources from those households to households whose position rests on shares, property and other claims on future income.

The report’s own tally shows the size of the gap on its wealth ladder. Between the first quarter of 2020 and the second quarter of 2026, it states, the top 1 per cent by wealth gained $30.8 trillion and the bottom half $2.3 trillion.

Rising pay, slipping position

The report does not claim that incomes stood still. It notes that real median household income rose 19 per cent between 2000 and 2025, and that the real hourly earnings of production workers rose 20 per cent. It calls both true and important. Continue Reading…

How much can you spend in Retirement this year? A simpler way to Track Withdrawals

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By The Yearwell Team

(Sponsored Blog)

Most Retirement advice is about getting to the finish line: saving, investing and making the most of your RRSP and TFSA room. Far less is said about what happens next, when the paycheque stops and you start drawing down what you’ve built.

For many retirees, that switch is harder than expected. The question changes from “How much should I save?” to “How much can I safely spend this year?” And it comes back every time you move money out of a RRIF, a TFSA or a non-registered account.

Start with one number for the year

A simple way to answer it is to turn your savings into a yearly spending allowance. Many people start with a withdrawal rate, such as the well-known 4% rule: take about 4% of your portfolio in the first year, then adjust that dollar amount for inflation in the years that follow. Some prefer 3% for an extra margin of safety; others go a little higher because they have a pension or plan to spend more in their early, active years.

None of these numbers is a guarantee, and the right rate depends on your age, other income, taxes and comfort with market swings. That’s a conversation for you and your planner. But having one clear number for the year makes every other decision easier.

Don’t forget the RRIF minimums

In Canada, RRIFs add a wrinkle. Once you convert, you must withdraw at least a minimum percentage each year, starting at 5.28% at age 71 and rising after that. If your RRIF minimum is more than you plan to spend, the extra can go into a TFSA or a non-registered account instead of being spent. Keeping track of what you’ve withdrawn, and from which account, also means fewer surprises at tax time.

Track your pace, not just your total

The other half of the job is following the plan through the year. Spending in retirement is lumpy: a new roof in the spring, a trip in the fall, gifts in December. Looking at account balances alone won’t tell you whether you’re ahead of or behind where you meant to be. A simple monthly check will: compare what you’ve actually withdrawn with an even pace for the year, and you’ll know whether to ease off or relax.

Rising costs make this matter more. When fuel, heating and groceries jump, a budget that felt comfortable in January can feel tight by the fall. Reviewing your allowance once a year, and checking your pace every month or two, is usually enough to stay on course.

Where Yearwell fits

We built Yearwell to make this routine easy. You add your accounts, such as a RRIF, RRSP, TFSA or non-registered investments, and pick a withdrawal rate. Yearwell turns that into a yearly allowance, lets you log each withdrawal in a few seconds, and always shows how much is left for the year and how you’re pacing month by month. You can test different rates to see roughly how long your savings could last, and at year end it creates a one-page summary you can share with a partner or planner.

It’s private by design: there are no bank logins and no sign-up, and your information stays on your phone. Yearwell is free to download on the App Store and Google Play, with optional Pro features. Learn more at yearwell.app.

The bottom line

Retirement income doesn’t need a complicated spreadsheet. Pick a sensible yearly number, know your RRIF minimums, and check your pace as the year goes on. Whatever tool you use, the goal is the same: spending with confidence instead of guessing.

This post is for general information only and is not financial advice.

About the author

Yearwell is a free retirement withdrawal tracker for people living off their savings. Set your withdrawal rate, see your yearly spending allowance, log each withdrawal and always know what’s left, with no bank logins. Learn more at yearwell.app

Deja vu all over again: The case for Dividends and Low-Volatility stocks

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Shutterstock (Yury Zap)

By Noah Solomon,

Special to Financial Independence Hub

You go back, Jack, do it again, wheel turnin’ ’round and ’round
You go back, Jack, do it again

— Do It Again, by Steely Dan

 

 

 

 

The Historical Track Record: What has Worked

Eugene Fama, an American economist and Nobel Laureate, is recognized for his work on portfolio theory. Fama is best known for his groundbreaking research on multi-factor models, which incorporate multiple variables to better explain portfolios’ risks and returns.

In collaboration with Kenneth French, Fama challenged the widely held belief that a portfolio’s beta (its sensitivity to overall market movements) is the sole determinant of its average return. Developed in 1992, the original Fama-French Three Factor model demonstrated that smaller companies tend to outperform larger ones, and that stocks with lower valuations tend to outperform those with higher ones.

Since Fama and French’s original findings, academic research has identified additional characteristics that further explain a portfolio’s return, including its dividend yield and volatility. Over the long-term, less volatile stocks have outperformed their more volatile counterparts, and stocks with higher dividend yields have outperformed those with no or lower ones. Moreover, both low-volatility and higher-yield stocks have exhibited considerably less volatility than the overall market.

Low Volatility & Higher Dividend Yielding Stocks vs. Overall Market (1964-2025)

If only Life were so Simple

The above table implies that investors should simply hold low-volatility companies that have higher than average dividend yields, sit back, enjoy above-market returns, and accumulate significantly more wealth over the long term.

As is often the case with investing, things are not so simple. Although these characteristics have indeed delivered impressive long-term performance, the proverbial “ride” has entailed some painful bumps in the road.

In times when investors are most optimistic and speculative fervor is widespread, markets tend to underprice risk, which leads to a relative undervaluation of companies with defensive attributes vs. their more speculative peers. Such was the case in the dotcom-fuelled bull market of the 1990s, when both low-volatility and higher-yield stocks materially underperformed their more speculative counterparts.

Low Volatility & Higher Dividend Yield Stocks vs. Overall Market (1990-1999)  

Notwithstanding the long-term outperformance of low volatility and higher dividend yielders, FOMO (fear of missing out) is a powerful force that can have perverse effects on behaviour. Many investors found it excruciatingly painful sitting with these holdings as they lagged the high-flying darlings of the day. None other than J.P. Morgan himself stated, “Nothing so undermines your financial judgement as the sight of your neighbor getting rich.”

Importantly, those who had the fortitude to stick with their low volatility and higher dividend yield holdings would have reaped significant rewards over the ensuing decade.

Low Volatility & Higher Dividend Yield Stocks vs. Overall Market (2000-2009)

 

The trillion-dollar question is: When one incorporates the mechanics of compounding, how did low-volatility and higher-dividend-yield stocks fare over the entire twenty year “round trip” from 1990-2009? As the table below illustrates, investors who remained steadfast in the 1990s as their “boring” portfolios underperformed were more than compensated for their patience.

Low Volatility & Higher Dividend Yield Stocks vs. Overall Market (1990-2009)

 

Summing it all up, the historical data indicate:

  • Despite underperforming during periods of well above average returns that beget speculative fervor and unusually low risk aversion, low-volatility and higher-dividend-yield stocks have outperformed materially over the long term.
  • The relative performance of stocks with these characteristics is strongest in periods of market stress: they deliver outperformance and portfolio diversification when it is most needed.

Déjà Vu all over again

The outperformance of low-volatility and higher-dividend-yield stocks was particularly pronounced during the “lost decade” of 1999-2009, which is the only 10-year period since 1964 in which U.S. stocks had negative average annualized returns. However, these characteristics don’t need a highly unfavourable environment to shine, nor do rising markets necessarily cause them to underperform.

Low Volatility & High Dividend Stocks: Rolling 10-Year Annualized Returns (1964-2025)

 

 

From a historical standpoint, the underperformance of low-volatility and higher-dividend yield stocks over the past ten years is highly anomalous. The only other ten-year period that witnessed this phenomenon was the dotcom-based bull market of the 1990s, which was followed by an unusually strong period of outperformance for low-volatility and higher-dividend-yield stocks.

We can do this the Easy Way or the Hard Way

Since markets bottomed in March 2009 following the global financial crisis, the S&P 500 has delivered an annualized return of 16.4%, as compared to its long-term average of 10.2%. Continue Reading…