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Does the 4% Rule Work Outside the US? Safe Withdrawal Rates Around the World
The 4% rule was built from historical U.S. stock and bond returns. International studies show that results depend on the market, portfolio and retirement horizon. A 2025 study of 38 developed markets estimated a 2.31% withdrawal rate for a 65-year-old couple accepting a modeled 5% probability of financial ruin under its assumptions. That is not a universal country rate or a confidence interval for your household. Compare several spending and return scenarios before choosing a plan.
Where the 4% rule comes from
In 1994 the planner William Bengen tested every 30-year US retirement since 1926. The highest starting withdrawal, raised each year with inflation, that never ran out in any of those periods was a little over 4% of the starting portfolio. That became the 4% rule, and its flip side, the 25× rule: save 25 times your yearly spending. Our guide to the 4% rule and FIRE explains the rule itself.
The weak spot is the data. The 20th century was unusually kind to US investors: the country avoided the wars, hyperinflations and market closures that hit many others, and its stock market grew into the world’s largest. Testing only the winner makes any rule look safer than it is.
What the international evidence shows
| Study | Data | Finding |
|---|---|---|
| Pfau (2010), Journal of Financial Planning | 17 developed countries, 1900 to 2008, 30-year retirements | A 4% inflation-adjusted withdrawal would have been safe in only 4 of the 17 countries, even with generous assumptions. A fixed 50/50 stock and bond mix failed at some point in all 17. |
| Anarkulova, Cederburg, O’Doherty and Sias (2025), Journal of Pension Economics and Finance | 38 developed countries, with real lifespans instead of a fixed 30 years | For a 65-year-old couple, the study estimates about 2.3% at a modeled 5% probability of financial ruin, and roughly a 1-in-6 probability using 4%, under its portfolio and lifespan assumptions. These are model results, not universal household risks. |
| Morningstar, The State of Retirement Income (2025) | Forward-looking return estimates, 30 years, 90% success | About 3.9% for fixed, inflation-adjusted withdrawals, and higher (into the 5% range) for retirees willing to vary their spending. |
The studies use different portfolios, time horizons, lifespan assumptions and definitions of success, so their rates are not directly comparable. They show why a historical U.S. rule should not automatically be applied to a different household or country; they do not prove one universally safe withdrawal rate.
Why your country matters
- Home bias. Most people hold mostly local shares and bonds. Japan’s stock market took more than three decades to regain its 1989 peak, and Germany, Italy and France had long stretches of poor real returns in the 20th century. A retiree tied to one of those markets fared far worse than an American.
- Inflation. The rule raises spending with inflation every year. Countries with bursts of high inflation saw bonds lose much of their real value, which hurt balanced portfolios badly.
- Costs and taxes. A withdrawal rate is before fees and taxes. Fund fees of 1% a year are still common in many countries. Fees lower a safe withdrawal rate noticeably, though by less than the full fee: a 1% fee does not turn 3.9% into 2.9%, but it does take a real bite.
- Currency. If you spend in one currency and invest in another, exchange-rate swings add risk in both directions. Global diversification usually helps more than it hurts, but it is not free of risk.
What it means for your number
Your target is your yearly spending (after any state pension) divided by the withdrawal rate. A lower rate means a bigger target:
| Withdrawal rate | Multiple of spending | Target for 40,000 a year |
|---|---|---|
| 4% | 25× | 1,000,000 |
| 3.5% | about 28.6× | about 1,143,000 |
| 3% | about 33.3× | about 1,333,000 |
| 2.5% | 40× | 1,600,000 |
Subtracting a pension assumes it starts when retirement begins, rises with inflation and is measured consistently with spending after taxes. For earlier retirement, model each bridge year separately. For illustration, 20,000 of yearly missing income for three years adds 60,000 in today’s money before investment returns, taxes and timing differences. A fixed nominal pension loses purchasing power. The FI Number calculator does not model those details.
The amounts work in any currency. Dropping from 4% to 3% raises the target by a third, which can mean several more years of saving, so it is worth knowing which levers bring it back down.
Ways to spend more safely
- Diversify globally. Owning the world’s markets rather than one country’s raises safe withdrawal rates in the international studies, because no single country’s bad century sinks the whole plan.
- Be flexible. The rule assumes you never cut spending, even after a crash. Rules that trim spending a little in bad years (often called guardrails) support a noticeably higher starting rate.
- Count your guaranteed income. A state pension or annuity covers part of your spending, so the portfolio has to cover less. Only the gap needs the withdrawal-rate maths, as long as you also cover any years before the pension starts.
- Keep costs low. Low-cost index funds keep more of the return in your pocket, which matters more over a 30-year retirement than almost any other choice you make.
- Revisit every year. A plan that starts at 3.5% and is checked each year is safer than one set at 4% and forgotten.
Your retirement number is a core part of Retirement wealth, one of the eight dimensions this site measures. The FI Number calculator works in your own currency, and the Retirement assessment looks at your plan as a whole.
Common questions
Does the 4% rule work outside the US?
It depends on the portfolio and assumptions. Pfau’s historical international analysis found that 4% was not consistently sustainable across the countries tested. The 2025 broad-market study’s approximately 2.3% result assumes a particular retired-couple model and a 5% probability of ruin; it is not a prescription for every non-U.S. retiree.
What is a safe withdrawal rate for a UK, Canadian or European retiree?
There is no single safe rate for a UK, Canadian or European retiree. Test withdrawal rates such as 3%, 3.5% and 4% as scenarios, not guarantees, with your horizon, asset mix, fees, taxes, currency, pensions and ability to reduce spending. A qualified local adviser can help assess the trade-offs.
How much do I need to retire with a 3% withdrawal rate?
Divide your yearly spending after any pension by 0.03, which is about 33 times your spending. For 40,000 a year that is about 1.33 million, compared with 1 million under the 4% rule.
Does global diversification make the 4% rule safer?
It helps. Holding the world’s markets instead of only your own country’s means a single country’s bad decades cannot sink the whole plan, and international studies find higher safe withdrawal rates for diversified portfolios than for home-only ones.
Related guides
Sources
- An International Perspective on Safe Withdrawal Rates: The Demise of the 4 Percent Rule?, Wade D. Pfau, Journal of Financial Planning
- The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets, Anarkulova, Cederburg and O’Doherty and Sias, Journal of Pension Economics and Finance
- The State of Retirement Income, Morningstar
This guide is for informational and educational purposes only. It is not financial, medical, legal, or tax advice. Consult a qualified professional for guidance specific to your situation.
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